Oil ends 2015 down 35 percent; long, painful hangover seen

Thu Dec 31, 2015 3:43pm EST
 
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By Barani Krishnan and Ahmad Ghaddar

NEW YORK/LONDON (Reuters) - Oil prices rose on Thursday but fell as much as 35 percent for the year after a race to pump by Middle East crude producers and U.S. shale oil drillers created an unprecedented global glut that may take through 2016 to clear.

Global oil benchmark Brent and U.S. crude's West Texas Intermediate (WTI) futures rose between 1 and 2 percent on the day on short-covering and buying support in a thinly traded market ahead of the New Year holiday.

But for 2015, both benchmarks fell double-digits for a second straight year as Saudi Arabia and other members of the once-powerful Organization of the Petroleum Exporting Countries (OPEC) again failed to boost oil prices.

The U.S. shale industry, meanwhile, surprised the world again with its ability to survive rock-bottom crude prices, churning out more supply than expected, even as the sell-off in oil slashed by two-thirds the number of drilling rigs in the country from a year ago.

The United States also took a historic move in repealing a 40-year ban on U.S. crude exports to countries outside Canada, acknowledging the industry's growth.

"You do have to tip your hat to the U.S. shale industry and their ongoing ability to drive down costs and hang in there, albeit by their fingernails," said John Kilduff, a partner at Again Capital, an energy hedge fund in New York.

Brent crude settled up 82 cents at $37.28 a barrel, rebounding from a near 11-year low of $36.10 hit earlier in the session. For the month, it was down 16 percent and for the year, it fell 35 percent. In 2014, Brent lost 48 percent.

WTI rose 44 cents to $37.04 a barrel. It slid 11 percent in December and 30 percent for the year, after a 46 percent loss in 2014.   Continued...

 
An oil pump is seen in Varadero, Matanzas province, Cuba, during an organized tour by the state-run Cuba-Petroleo (CUPET), October 21, 2015. REUTERS/Enrique de la Osa