Oil prices edge higher after dropping to near 11-year lows

U.S. commercial crude oil stocks probably dipped last week, while distillate and gasoline stocks likely edged higher, a preliminary Reuters survey showed on Monday.

USA crude futures CLc1 were down 46 cents at $35.51 per barrel after already slipping 79 cents the previous day.

The deepening diplomatic spat between key producers Iran and Saudi Arabia remains a factor affecting prices “but the market is oversupplied and traders are looking for opportunities to sell”, he told AFP.

Nigeria’s 2016 budget was based on a benchmark of 38$ per barrel and the country would still need to borrow N2.2tr to fund the budget.

“It is maybe a sense of security from the marketplace that, with this seeming glut of crude oil, … you can have tensions in the Middle East, and they don’t count for as much as they used to three or four years ago”, he said.

Crude oil prices reversed earlier gains Tuesday, as concerns about an expanding global glut weighed on sentiment, even as tensions in the Middle East remained high.

In the United States, concerns over mounting stock levels were ongoing, with crude inventories likely to have risen by 439,000 barrels last week, according to a Reuters poll of eight analysts.

On the other side is slowing demand for oil, especially in China, where economic growth is moderating.

The oil price crash comes on the back of near-record output from producers such as the Organization of the Petroleum Exporting Countries (OPEC), Russia and North America, which has left storage tanks brimming with unneeded supplies. Stewart Glickman, an analyst with S&P Capital IQ, said geopolitical risk has lost some of its ability to influence oil prices.

The US Energy Information Administration (EIA) will publish its closely watched weekly data at 1530 GMT (10.20 a.m. ET). And in the past, a simmering conflict like this would have led to a spike in oil prices.

The plunge in prices is causing countries that rely heavily on oil export revenues economic pain.

Saudi Aramco has raised its February price for its Arab Light grade for Asian customers by $0.60 a barrel versus January to a discount of $0.80 a barrel to the Oman/Dubai average amid higher refining margins in the region, it said on Tuesday.

A year ago was dominated by reluctance of major producers to voluntarily give up on market share, leaving pure economics to find equilibrium in the market.