LONDON--Crude oil futures regained some lost ground but stayed
near five-year lows Thursday, after crashing by close to 5% on
Wednesday.
The commodity, which has tumbled by 40% since the summer on
fears of oversupply, is unlikely to make a sustained comeback soon,
market participants say.
"The market is taking a little bit of breath today and history
tells us that Thursday is usually an up day," said a London-based
energy broker. "But there is still a lot of pressure out there and
the market hasn't found its floor yet."
Adding to the pressure were comments by Saudi Arabia's oil
minister Ali al-Naimi on the sidelines of a conference in Lima late
Wednesday. Asked whether the Organization of the Petroleum
Exporting Countries would need to cut oil production before the oil
cartel's next meeting in June, Mr. al-Naimi was quoted as saying:
"Why should we cut production? Why?"
His comments fueled speculation that Saudi Arabia, long the
world's most influential oil price broker, was prepared to tolerate
lower prices and let market forces settle the current global oil
glut. "The minister's comments on Wednesday definitely added to the
trouble," the energy broker said.
At its meeting in November, OPEC decided not to intervene to
prop up oil prices. The move was primarily seen as a way for the
organization to protect its market share. Prices have fallen by
more than 10% since then and analysts don't anticipate a recovery
in the foreseeable future.
"For this, the economic conditions for the oil markets have to
change, which is an unlikely possibility given OPEC's decision not
to cut production a fortnight ago," Jameel Ahmad, chief market
analyst at FXTM, wrote in a note to clients.
On Wednesday, OPEC said demand for its oil is expected to fall
below its current production quota of 30 million barrels a day.
According to the organization's latest forecasts, demand for its
crude will decline to 28.9 million barrels a day in 2015, down from
29.4 million barrels a day in 2014.
"With OPEC not taking any action, we are probably going to fall
to 50 dollars a barrel," Mr. Ahmad said. "That is a probable
support level, one that people would be comfortable with."
On Thursday morning in London, Brent crude for January delivery
was up 59 cents at $64.83 a barrel on ICE Futures Europe. In
electronic trading on Nymex, WTI changed hands at $61.40, up 46
cents from Wednesday when it touched levels not seen since the
global recession in 2009.
NYMEX reformulated gasoline blendstock for January, the
benchmark gasoline contract was little changed at $1.6520 a gallon.
Front-month ICE gas oil was up $3 from Wednesday's settlement,
trading at $587.00 a metric ton.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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