REUTERS
Oil prices headed for a second year of steep losses, despite inching up fractionally in the last trading hours of 2015, as record OPEC supply created an unprecedented global glut that may take another year to clear, according to Reuters.
U.S. West Texas Intermediate (WTI) crude futures traded 11 cents higher at $36.71 a barrel at 0936 GMT (4.36 a.m. ET) on Thursday and Brent was 20 cents higher at $36.66 a barrel, Reuters wrote.
Prices fell 3 percent on Wednesday as crude inventories in the United States rose 2.6 million barrels last week, the U.S. Energy Information Administration said, echoing high stocks in Europe and Asia.
"We have brimming oil inventories in Europe. And our predictions are that oil inventories in Asia are going to get closer to saturation in the first quarter. Which means that most of the global surplus will have to be stored in still available storage capacity in the United States," Bjarne Schieldrop chief commodity analyst at SEB in Oslo said.
The immediate outlook for oil prices remains bleak. Goldman Sachs has said prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.
Morgan Stanley said in its outlook for next year that "headwinds (are) growing for 2016 oil." The bank cited ongoing increases in available global supplies, despite some cuts by U.S. shale drillers in particular, as well as a slowdown in demand as the main reasons.
"The hope for a rebalancing in 2016 continues to suffer serious setbacks," the bank said.
Traders expect some U.S. oil to be supplied into global markets, following the surprise lifting of a decades-old U.S. crude export ban in December, which ended a years-old discount in U.S. crude prices to international Brent.
Brent prices briefly fell below $36 per barrel this year, effectively wiping out the gains from a decade-long commodity super-cycle sparked by China's unprecedented energy demand boom.
The downturn has caused pain across the energy supply chain, including shippers, private oil drillers and oil-dependent countries from Venezuela and Russia to the Middle East.
Analysts estimate global crude production exceeds demand by anywhere between half a million and 2 million barrels every day. This means that even the most aggressive estimates of expected U.S. production cuts of 500,000 bpd for 2016 would be unlikely to fully rebalance the market.