Oil prices give up gains ahead of Fed move

Brent crude LCOc1, the global benchmark, traded up 40 cents, or 1 percent, at $38.32 a barrel at 0913 GMT, levels last seen in late 2008.

Meanwhile, Chinese energy stocks gained Wednesday, after officials said a day earlier they would temporarily stop adjusting domestic gasoline and diesel prices, which could raise costs for consumers and margins for suppliers. Without doubt, December’s disorderly decline in the cartel’s cohesion has moved oil price forecasts downwards – and the potential timing of a pick-up further back.

Noble shares were last up 7.7% but remain down 63% year-to-date amid accusations of accounting irregularities by an anonymous research group.

Both benchmarks traded lower on an industry report that showed an unexpected increase in USA crude stockpiles. US crude CLc1 was trading at $36.49, up 18 cents.

Unlike in the past, rather than cutting output in an attempt to sustain prices, the Organization of the Petroleum Exporting Countries (OPEC) continued to ramp up production.

“First of all, our policy calls for maintaining production at 525-530 million tonnes (a year), according to our energy strategy”, Novak told Rossiya-1 TV station, giving output figures equivalent to 10.5-10.6 million barrels per day (bpd). However, this may not be enough to improve sentiment with traders and money managers…

At the meet, India asked Opec for a reasonable oil pricing. “Russian Federation has also greatly increased production, and the possibility that sanctions will be lifted on Iran in 2016 could flood the market with even more supply”.

Risk consultancy Control Risks said in its RiskMap 2016 outlook that “the security and political risk outlook is worse than at any point in the past decade”, citing a mix of terrorism threats, political instability and economic uncertainty. This seasonal weakness is compounding a structural oversupply as producers pump out anywhere between 0.5 million and 2 million barrels of crude every day in excess of demand, helping pull down prices by two-thirds since mid-2014.

Olivier Jakob, from Swiss-based analysts Petromatrix, estimates that China has added about 103 million barrels of oil to its reserves this year. But for the first time in over a week the picture wasn’t a bleak one, even if the modest recovery in oil prices will do nothing to keep the bears at bay.

“The oil market remains more tightly balanced than is reflected in today’s low prices”.