U.S. crude resumes decline as oversupply concerns return

Strong Petrochemical Holdings

15/12/2015 24:46

By Aaron Sheldrick 
    TOKYO, Dec 15 (Reuters) - U.S. crude oil prices fell in 
early Asian trade, resuming their decline after strong gains on 
Monday snapped a six-day losing streak, on concerns about a 
global glut and mild winter demand. 
    West Texas Intermediate  CLc1  fell 5 cents to 36.26 by 0024 
GMT. On Monday it rose 1.94 percent to $36.31, after briefly 
flirting with 11-year lows. 
    Brent  LCOc1 , the global benchmark, was yet to trade. The 
contract settled down 1 cent at $37.92 a barrel on Monday.  
    Bearish sentiment remains strong, fuelled by an OPEC 
decision earlier in December to abandon setting a production 
ceiling for the oil cartel and a likely rise in supplies from 
Iran after sanctions are lifted following landmark deal on 
Tehran's nuclear programme.  CFTC  
    Traders said that the low prices heading towards the end of 
the year were a combination of structural oversupply and 
seasonal price weakness. 
    "The market is very weak as the weather is very mild with 
reduced demand for heating oil," said Oystein Berentsen, 
managing director of crude oil at Strong Petroleum  0852.HK . 
    Oil markets usually see strong demand towards year's end as 
the northern hemisphere enters its peak heating demand winter 
season, yet an unusually mild start to winter, blamed at least 
in part on the weather phenomenon El Nino, has limited the 
amount of heating days.  urn:newsml:reuters.com:*:nL3N0Z51NL 
    BNP Paribas said that the United States, Canada and Europe 
had all been milder than normal in the last two weeks and that 
"in the next two weeks as a whole, all regions (including South 
Korea and Japan) will be milder than normal for this time of 
year, with the U.S., Canada and Europe being particularly milder 
than normal." 
    This seasonal weakness is adding to 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. 
    "Land storage capacity is now limited but OPEC keeps 
increasing production so the oil price is relentlessly trending 
down. Short-term further pressure can be expected and rallies 
will be sold. Iran may return to the market in January which is 
causing concern of increasing oversupply amid a mild winter," 
said Berentsen. 
 
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CHART-Europe to remain unusually warm for rest of year:     http://tmsnrt.rs/1TM4swr 
  
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 (Additional reporting by Henning Golystein; Editing by Michael 
Perry) 
 ((aaron.sheldrick@thomsonreuters.com; 81-3-6441-1320; Reuters 
Messaging: aaron.sheldrick.thomsonreuters.com@reuters.net)) 
 
Keywords: GLOBAL OIL/