By Nicole Friedman
U.S. oil prices rebounded from five-year lows on Monday as
traders who had bet on lower prices locked in gains.
Oil prices tumbled Thursday and Friday to multiyear lows after
the Organization of the Petroleum Exporting Countries decided to
maintain its production ceiling, rather than cut output to raise
prices as the cartel has done in the past.
The group's decision signaled to market participants that the
oil market will stay oversupplied through the beginning of 2015,
and prices could stay low for longer than previously expected.
On Monday, light, sweet oil for January delivery fell as low as
$63.72 a barrel on the New York Mercantile Exchange, the lowest
intraday price since July 2009, before rebounding to trade higher.
The contract recently rose $1.13, or 1.7%, to $67.28 a barrel.
"Today's a little bit more of a rebound from Friday's
plastering," rather than a long-lasting change in direction, said
Kyle Cooper, analyst at IAF Advisors in Houston. "We got [to
five-year lows] really quick, and it's not an entirely bad thing to
take some profits."
Brent, the global benchmark, recently gained $1, or 1.4%, to
$71.15 a barrel on ICE Futures Europe.
Still, "there are a lot of negative factors in the market--in
particular, the fact that it's an oversupplied market," said Bob
Yawger, director of the futures division at Mizuho Securities USA
Inc.
Without action from OPEC, "the market is oversupplied," said
Barclays in a note. "It will have to endure a volatile adjustment
period while non-OPEC supply, demand, and even some OPEC producers
adjust."
Barclays lowered its oil-price forecast for Brent to $99 a
barrel in 2014 and $72 a barrel in 2015, down from its previous
projections of $103 a barrel this year and $93 a barrel next year.
For the U.S. contract, Barclays expects prices to average $92 a
barrel this year and $66 a barrel next year, compared with its
prior forecasts for $95 a barrel in 2014 and $85 in 2015.
The slump in oil prices has pressured energy stocks,
particularly those of shale-oil producers and oil-service
companies. Weatherford International PLC on Monday said it agreed
to sell its engineered-chemistry and drilling-fluids businesses to
an affiliate of Berkshire Hathaway Inc.'s Lubrizol unit.
Weatherford said it expects to use proceeds from the deal, which is
expected to close before the end of the year, to pay down debt.
January reformulated gasoline blendstock, or RBOB, rose 3.47
cents, or 1.9%, to $1.823 a gallon.
January diesel gained 2.57 cents, or 1.2%, to $2.1869 a
gallon.
Michael Calia contributed to this article.
Write to Nicole Friedman at nicole.friedman@wsj.com
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