Oil up for first time in 8 sessions on USA draw, China

It was the lowest close since April 2004.

A general view of the BP ETAP (Eastern Trough Area Project) oil platform in the North Sea on February 24, 2014, around 100 miles east of Aberdeen, Scotland. Brent ended the day down 6.34% at $31.55.

Brent crude, the global benchmark, was up 87 cents at $31.73 a barrel, but hovered around low levels not seen for 12 years.

Iran’s Minister of Petroleum Bijan Zangeneh says current oil prices harm all producers and certain countries’ insistence on overproduction is politically motivated.

“Given that no fundamental relationship is now driving the oil market towards any equilibrium, prices are being moved nearly entirely by financial flows caused by fluctuations in other asset prices, including the dollar and equity markets”, said the bank.

But uncertainty over China lingers, and could continue to add to negative sentiment on oil futures, analysts said. Egypt will work on increasing its crude oil imports to refine them in Egyptian refineries and offer the products in the local market.

While demand fears are on the rise, the oil crash has mostly been fueled by a massive supply glut.

“This is a classic case of oversupply, it’s been building for about a year and a half”, said Aaron Brady, senior director at IHS Energy.

Suhail bin Mohammed al-Mazroui, minister of energy in the United Arab Emirates, who hinted that it would take another 18 months for oil prices to start picking up, said: “I’m not convinced Opec alone can change or can exclusively, unilaterally, change this strategy just because we have seen a low in the market”. In a note Monday, he said oil prices could easily slip to US$25 per barrel but would likely bounce back quickly to above $30. The agency noted, however, that there is “high uncertainty in the price outlook”.

Fuel prices dropped to new lows.

“The companies are doing the best they can to survive as long as they can”, said Spencer Welch, an oil expert at analysis group IHS.

“It’s hard to be optimistic over the short term when you have as much inventory being put into storage as we’ve seen happening right now and when Iran is going to put a significant amount of oil onto the market”, Morse said. The EIA hadn’t previously released forecasts for 2017.

The Saudi-backed policy, and supported really by only OPEC’s Gulf members, is aimed at pushing oil prices lower to squeeze USA shale producers out of the market.

Last year, some 95,000 jobs were lost in the energy sector by U.S.-based companies, according to the consulting firm Challenger, Gray & Christmas. Traders watch the API data for clues to the Energy Information Administration’s weekly inventories data, which is due Wednesday.

Crude oil prices started Tuesday stronger on speculation that members of the Organization of Petroleum Exporting Countries were considering an extraordinary meeting to review the steep market decline.