Oil above $37 as U.S. supply tightens, still near 11-year low

Thu Dec 24, 2015 12:46pm EST
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By Jessica Resnick-Ault

NEW YORK (Reuters) - Oil edged further above $38 a barrel on Thursday before retreating as it remained within sight of an 11-year low reached this week, as traders put positions in order ahead of an expected week of low liquidity ahead.

U.S. crude has gained support from falling inventories, reduced drilling and the lifting of a ban on most U.S. crude exports, which has pushed U.S. crude to a premium to global benchmark Brent for the first time in about a year.

Brent was up 62 cents at $37.98 a barrel as of 11:48 a.m. EST. It fell to $35.98, an 11-year low, on Tuesday. U.S. crude was up 46 cents at $37.96 after gaining more than 8 percent this week.

"Some traders playing spot on the downside are getting out and calling it a year," said Tariq Zahir, managing partner at Tyche Capital Advisors.

U.S. crude futures have seen support from fundamentals including the lifting of a four-decade ban on crude exports.

"The lifting of the ban on U.S. exports will provide some underlying support for U.S. crude. Oil demand in 2015 was exceptionally high and at current prices, demand is going to remain strong next year," said Olivier Jakob, analyst at Petromatrix.

"For now, there is still an ample supply of crude and a huge amount in storage."

Brent traders in London said the market was quiet with many participants away for the Christmas holidays.   Continued...

A worker checks steel pipes at an oil field preparing for oil and gas exploitation in Yilong, Sichuan province December 10, 2008.  REUTERS/Stringer