Oil prices bounce off 11-year lows, bearish outlook caps gains
By Karolin Schaps and Jessica Resnick-Ault
NEW YORK (Reuters) - Brent crude touched an 11-year low on Tuesday, rebounding slightly after settlement, as a bearish outlook for 2016 and weaker profits for refining oil products kept a lid on gains.
Brent crude LCOc1 for February delivery settled at $36.11 a barrel, after earlier dipping to $35.98, below an eleven-year low.
U.S. West Texas Intermediate (WTI) crude futures CLc1 flipped to a premium to Brent, settling at $36.14 a barrel, up 33 cents, or 0.92 percent.
Both benchmarks saw a boost late in the day after the American Petroleum Institute, an industry trade group, released data showing an unexpected drop in stockpiles. U.S. crude rose to $36.46, while Brent climbed to $36.38.
The API suggested inventories fell 3.6 million barrels in the week ended Dec. 18, compared with an expected 1.1-million-barrel increase.
Brent's weakness as WTI strengthened slightly brought the two benchmarks into parity for the first time since January of this year.
"With the (U.S.) export ban being lifted, we've seen that spread collapse, and it's going to continue in that direction as demand becomes greater for WTI globally," said Matthew Perry, partner at Kronenberg Capital Advisors. "We expect that spread to stay very narrow, and there will be times when WTI will be at a premium."
Traders squared positions ahead of a traditional period of low liquidity between Christmas and New Year's Day as they covered short positions, bolstering U.S. crude. Continued...