Oil ends up 3 percent on cold weather but glut worry persists

Brent was up $1.05, or 2.8 percent, at $37.51 a barrel, rebounding from a near 11-year low of $36.10 earlier in the session.

Dec 30 USA crude stocks rose unexpectedly last week on a bigger-than-expected build in distillate and gasoline inventories and higher imports, data from the Energy Information Administration showed on Wednesday.

The American Petroleum Institute releases its stockpiles report later Tuesday and the more closely watched US Department of Energy (DoE) report comes out Wednesday.

Crude futures have dived from more than US$100 a barrel in mid-2014 as abundant supplies were exacerbated by strong output by OPEC and the United States. The recent price brings its past 5-day performance at -2.44 percent and trades at an average volume of 12.21M shares.

The immediate outlook for oil prices remains bleak, with some analysts like Goldman Sachs saying prices as low as US$20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.

Oil filling tanks at the US storage hub of Cushing, Oklahoma, hit record levels last week, sending crude futures tumbling more than 3 percent as the ever-swelling supply glut deepened the year-long rout in prices. Brent prices are down more than 35% this year.

Oil prices began falling in mid-2014 as ballooning output from the Organisation of Petroleum Exporting Countries (Opec), Russia and U.S. shale drillers started to outpace demand.

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

Javadi said Iran is ready to increase exports to roughly 2 million barrels per day (MMBPD) within the next six months.

Oil prices seem to have taken the place of the Fed in headlines and market focus.

Crude prices, however, did not lose much after their initial decline on the EIA data.

“More bad news for the oil patch, as inventories across the board rose, especially at a time of year when we expect inventories to decline as refiners meet their end of year inventory targets”, said Andrew Lipow, president of Lipow Oil Associates.

According to Afi analysts, the trend in crude prices is being clearly affected by the fact that there are continuous upward revisions to crude supply worldwide, while demand is not picking up with the same intensity.

Traders are also concerned that Iran will flood the market with hundreds of thousands of barrels of crude oil if sanctions on its oil exports are lifted as part of a nuclear deal.