Oil prices bounce off 12-year lows

Reports have said that British Petroleum will also be cutting 4,000 jobs, after its European rival Royal Dutch Shell sacked 7,500 people past year. That was up from 14,000 the year before.

“Another bleak day for the oil sector, another great day for motorists”, said Patrick DeHaan, senior petroleum analyst with GasBuddy.

By 12:35 p.m. EST (1735 GMT), Brent crude was down 32 cents at $30.54 a barrel, while U.S. West Texas Intermediate crude (WTI) was up 11 cents at $30.55. Many companies are still using $50 per barrel as an operating assumption when presenting their outlooks for 2016.

“The big picture for the market is still oversupply”, David Lennox, an analyst at Fat Prophets in Sydney, said by phone.

A notable exception to the sliding Baltic Dry Index has been the tanker segment for transport of crude oil. That’s a problem, since even the most modest project requires vast commitments of resources over a number of years. The Dow closed up 117.65 points, or 0.72 percent, yesterday, but the markets have fallen sharply since the beginning of the year.

Weakening demand in China, the world’s second-largest energy consumer, has helped drive the price down.

Estimates from eight analysts surveyed by The Wall Street Journal showed that US oil inventories probably grew 2.1 million barrels in the same period. These days, “Brent” actually refers to oil from four different fields in the North Sea: Brent, Forties, Oseberg and Ekofisk (Off the coast of Norway and United Kingdom).

Oil companies have begun to lay off thousands of employees as they scramble to adapt to basement prices.

“I think the strategy is working”, said UAE oil minister Suhail bin Mohammed al-Mazrouei, at an energy conference in Abu Dhabi.

“We know that the U.S. economy is not really accelerating but most importantly emerging markets continue to suffer and that’s where China sends a lot of its products”. The British cabinet will meet in Scotland for only the third time in history to announce plans for the country’s oil industry, which it warns will decline if Scots vote for independence. Russia, Venezuela and Gulf states like Saudi Arabia are seeing state coffers empty at an alarming pace, forcing them to make cost cuts that affect the wider population. The economy already is sliding into recession. The EIA will also publish its latest estimate of U.S. oil output later in the day. In Bahrain, gas prices at the pump rose by as much as 60 percent on Tuesday.

A stronger USA dollar is compounding an oil market rout that has seen crude prices fall by nearly 20 per cent this month, and options trades suggest the market is preparing for deeper losses ahead.

“China’s biggest oil companies are not equipped to operate and compete in a crude environment below $40 a barrel”, Yu said by phone on Wednesday.