Brent falls to another 12-year low on oversupply gloom

Fears that the Islamic Republic could add to the world’s bumper supply glut as early as next week sent Brent crude falling by 2.75pc to $29.73 – matching lows last seen in 2004.

Brent crude prices touched 13-year lows on Wednesday amid concerns that supply growth continues to outpace demand.

The market will be closely watching China’s gross domestic product data to be released early next week, according to Gupta.

Brent North Sea crude for delivery in February also gained 72 cents, finishing at $31.03 a barrel in London. On Tuesday, WTI fell at one point to 29.93, a level last seen in December 2003, although it was given a lift later by a private report pointing to a drop in inventories. It settled at US$30.48 on Wednesday, up 4 cents, the contract’s first gain in 2016.

In Europe, Germany’s DAX fell 0.2 percent while France’s CAC 40 rose 0.3 percent.

USA benchmark West Texas Intermediate (WTI) for February rose 72 cents to $31.20 a barrel on the New York Mercantile Exchange. The S&P 500 Oil & Gas Exploration and Production Index increased 2.9 percent.

Increased Iranian oil output should feed into oversupply this year with the expected lifting of Western sanctions on that country’s exports, the US Energy Information Administration said. US investors woke up to a serious jolt Monday when the Dow Jones industrial average tumbled 1,000 points minutes after the market opened in a wave of selling that circled the globe after a historic plunge in Chinese stocks. Britain’s FTSE 100 edged down 1.1 percent to 5,896.86. Worries over the future of the world’s number 2 economy have lain behind the big falls registered in stock markets around the world at the start of 2016.

Analyst Jon Rigby, in a note said: “the close to breakeven nature of the sector in the upstream is indicative that we are close to the bottom, we believe”.

“Historically, WTI traded at a premium to Brent and it looks like we’re moving back to that”, said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston.

“The rallies don’t seem to last very long and that gives people even more concern about the market” despite oversold conditions that seem poised to support a positive run, Holland said. Prices have lost 17 percent this year. South Korea’s Kospi and Australia’s S&P/ASX 200 added 1.3 percent.

Amid the continuing weakness in oil prices, analysts have been sharply cutting their forecasts in recent weeks. The yen has been sought as a safe haven in the absence of confidence in other currencies recently, and that’s usually a negative for Japanese companies, which rely on exports to boost earnings.