USA crude edges up in early Asian trade amid market gloom

Given current estimates by the current oversupply into the oil market in the order of 2mln-to-2.5mln barrels per day, it would trigger further uncertainty over crude prices that have come down from highs above US$110 a little over 18 months ago. Brent crude, the worldwide standard, fell 2 percent.

US crude prices CLc1 were up 0.8 percent at $30.72 a barrel, but still not far from Tuesday’s nadir of $29.93, which was its lowest level since December 2003. That marked its first move below $30 a barrel since April 2004. A late afternoon stock plunge on Wednesday made this year’s slow start worse.

“Demand has been growing but it has been outpaced by supply”.

“There is a fear that the global economy and the United States economy as well could lapse into a recession given the fall in energy prices and greater economic weakness overseas, ” said Tim Ghriskey, chief investment officer of Solaris Asset Management in NY. The country’s oil minister Ibe Kachikwu told reporters in Abu Dhabi Tuesday a “couple” of OPEC members had called for such a meeting in the near future. “OPEC’s [Organization of the Petroleum Exporting Countries] production has been increasing … and we’ve had an incredibly warm winter, and the demand isn’t there”. But in this case, the diplomatic spat between Iran and Saudi Arabia is actually quite bearish because that’s going to cause Saudi Arabia to produce very high levels, as they fight for market share with Iran when Iran comes back into the oil market.

“We believe China is sending a strong message to speculators and trying to stabilise RMB depreciation expectations”, HSBC said in a research note, according to Reuters.

In Europe, Germany’s DAX advanced 1 percent to 10,085 while France’s CAC 40 rose 1.4 percent to 4,441. The FTSE 100 of leading British shares gained 0.5 percent.

MSCI’s broadest gauge of stocks globally fell 0.8%.

THE QUOTE: “When sentiment rules, data can only play a secondary role”, said Michael McCarthy, chief strategist at CMC Markets in Sydney.

“There are signs that markets are finding their feet again”, said Craig Erlam, senior market analyst at OANDA.

“We need to see big draws in both inventories and production turnover before there is a sustained rebound”.

Forecast real gross domestic product (GDP) for the world, weighted by oil consumption, which increased by an estimated 2.4% in 2015, rises by 2.7% in 2016 and by 3.2% in 2017. A report showing that China’s exports fell less than expected in November helped lift the market.

In Asia, stocks rallied despite the fall in Shanghai. The Nasdaq composite dropped 46 points, or 1 percent, to 4,639. The Bank of East Asia Limited shares closed 2.21% lower on Hong Kong’s trade screen.