Brent oil prices slide back toward 11-year lows

Oil could draw support if U.S. Energy Information Administration data later on Wednesday shows a drawdown in U.S. weekly oil stocks.

“I think the renewed decline in oil could affect sentiment over energy stocks in Asia today, although we are likely to see very low volumes on the last trading day of the year”, said Bernard Aw, market strategist at IG Markets in Singapore. Brent futures were down 47 cents, or 1.24%, to $37.32 a barrel.

In addition, Sloup said, “there is some housekeeping before the end of the year” as investors arrange portfolios to limit exposure to the risk of betting too much on falling prices. South Korea’s Kospi was 0.1 percent higher at 1,966.31 and the Shanghai Composite Index gained 0.9 percent to 3,563.74.

Shares in Woodside Petroleum finished up 0.8% despite the drop in oil prices. WTI was up 96 cents at $37.77, after reaching as high as $37.88.

USA benchmark West Texas Intermediate for delivery in January was trading 58 cents higher at $38.09 and Brent crude for January was up 48 cents at $40.74 at around 02h50 GMT as dealers hunted for bargains after prices fell to their lowest in almost seven years this week.

Diesel futures dropped to the lowest level since 2004 as US stockpiles of distillates, a category that includes diesel fuel and heating oil, rose more than expected.

“Oil prices… have stabilised and that’s stopped the rot for now, but the headlines are all about the Saudi fiscal response to the sustained weak price”, added Societe Generale analyst Kit Juckes.

Currently, U.S. commercial oil stocks are at 491 million barrels and, despite growing refinery drawdowns and utilization rates, there are no signs of inventories declining.

The EIA reported that USA crude production rose by 23,000 barrels a day last week to 9.2 million barrels a day.

Oil prices had also collapsed early last week, with Brent crude hitting an 11-year low as a result of unabated global supply glut that has plagued the market since last year.

US stores of oil generally grow in the fall and the spring when refineries slow their processing in order to do maintenance.

They hinged this position on the fact that crude oil revenue accounts for about 90 per cent of the Nigeria’s foreign exchange earnings as the country is projected to produce 2.2 million barrels of crude oil per day in 2016.

“Stratfor added that Saudi Arabia could modify its output in the second half of 2016 after assessing the price impact of Iranian oil and evaluating declining commodity production in the United States”.