Oil plumbs new lows below $27 as rout persists

The organization, which advises countries on energy policy, said in its monthly report Tuesday that global excess supply may reach 1.5 million barrels per day during the first half of the year. WTI for March delivery, a new contract, rose 34 cents, or 1.20 percent, to Dollars 28.69 a barrel by 0330 GMT, while Brent gained 38 cents, or 1.36 per cent, to USD 28.26.

Oil prices leaped from 12-year lows Thursday, lifted by a swing to optimism on equity markets after steep losses since the beginning of the year.

Brent crude – which briefly fell below $28 on Monday – was 13 cents lower at $28.63.

The price of oil has crashed about 75 percent since mid-2014, hit by an oversupply, overproduction, weak demand and a slowdown in the global economy, especially China.

Meanwhile, Venezuela has requested that OPEC hold an emergency meeting to discuss steps to prop up oil prices, although delegates from other members of the producer group said such a gathering was unlikely.

The Department of Energy said crude inventories jumped by 4.0 million barrels last week, a day after the American Petroleum Institute reported a larger gain of 4.6 million barrels.

“The frailty in the Chinese growth remain the core problem for investors and the spotlights are not moving away from it anytime soon”, said Naeem Aslam, chief market analyst at Avatrade.

With sanctions still in place at the time, the NIOC source said the state company had agreed to sell some of its oil through Russian companies, although adding that in the end no oil was supplied.

U.S. imports are expected to rise due to lower Brent crude oil prices. “It could go lower”. Analysts polled by pricing agency Platts estimates an increase of 2.9 million barrel, and Citi expects growth of two to three million barrels.

India, as Iran’s biggest oil client after China, is one of NIOC’s key targets for increased sales now that the barriers to the open trade of its crude have been lifted.

The IEA is sticking with its forecast for a decline of around 600,000 bpd in non-OPEC output, which it said had been surprisingly resilient in the face of tumbling crude oil prices.

ANZ bank said prices were likely to come under more pressure after the release later in the day of the U.S. Energy Information Administration’s official oil stocks data.

Iran could also encounter difficulties because some of its oil infrastructure may need fix and replacement, while it may take time for its idle oilfields to be ramped up to full production, it said.

“The demand aspect is a longer term proposition for the market”, added McCarthy.