U.S. oil price gains as traders buy dip

Crude oil extended its slide on Monday, but steadied after moving within a hair of 11-year lows, on mounting fears that the global supply glut would only worsen amid the price war between leading OPEC and non-OPEC producers.

“We are seeing nothing unusual about this week’s price bounce given the fact that the entire complex had become much oversold based on virtually all of our technical indicators”, Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch Associates said in a note.

At the meet, India asked Opec for a reasonable oil pricing.

The oil cartel, he said, is not targeting a price.

“I saw six cycles – I saw very high price, I saw low price, and this is one of them. Political headlines over the next few days should knock us around”. “And it will be vice-versa”. Low price means less investment. (But) it is not good for consumers. “So what we are looking at is a fair price”, he said.

The outlook for integrated oil and gas companies is for EBITDA to show modest recovery in 2016 from 2015 lows, Moody’s predicted, though the exploration and production sub-sector will suffer EBITDA declines of 20%-25% in 2016, while drilling and oilfield services companies will see EBITDA declines of at least 20% next year.

Of course, lower oil leads to lower gasoline prices, so not everyone is upset at the low price of oil.

Oil fell on Wednesday on fresh evidence of growing global oversupply and as investors awaited the outcome of a U.S. Federal Reserve meeting where interest rates are likely to be raised, boosting the dollar and pressuring commodities.

The news comes as oil prices hit their lowest point in seven years as Saudi Arabia continues its oversupply and Iran prepares for an increase in production. “If there is no more supplies, there will be less supply to the market”.

“The current price situation will not continue… there will be less supply coming to the market”.

The world is awash in oil – more than 2 million barrels per day in excess supply is implied by OPEC’s numbers – before any extra barrels that reach the market from Iran once Western sanctions are lifted.

“We read any lifting of the United States export ban as a significant structural change…Lifting the ban could help to clear U.S. crude oil stocks”, said Olivier Jakob, an analyst at consultant Petromatrix. And they would like to import heavy crude.