Oil prices edge higher after dropping to near 11-year lows

Tue Jan 5, 2016 8:40pm EST
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By Jacob Gronholt-Pedersen

SINGAPORE (Reuters) - Oil prices edged higher on Wednesday, rebounding from near 11-year lows in the previous session as concerns over growing supply and rising stock levels outweighed tensions between key Middle East producers.

A rift between Saudi Arabia and Iran over the Saudi execution of a Shi'ite cleric failed to boost prices this week, as it appeared to put an end to speculation that OPEC members could agree production cuts to lift prices.

U.S. crude for February delivery CLc1 was 19 cents higher at $36.16 a barrel at 0124 GMT, after slipping 79 cents in the previous session.

Brent crude prices LCOc1 were up 18 cents at $36.60 a barrel, after closing down 80 cents.

"Geopolitical tension presents the greatest upside risk to the crude market, at least through the first half of the year," said Matt Smith, an analyst for energy database Clipper Data.

Still, a senior Iranian oil official said the country could moderate oil output and exports once Western sanctions are lifted to avoid putting prices under further pressure.

"We don't want to start a sort of a price war," Mohsen Qamsari, director general for international affairs of the National Iranian Oil Company (NIOC), told Reuters in an interview.

"We will be more subtle in our approach and may gradually increase output," Qamsari said. "I have to say that there is no room to push prices down any further, given the level where they are."   Continued...

Men work at the process of extracting crude oil on the seashore in Kyaukpyu township, Rakhine state, Myanmar October 5, 2015.  REUTERS/Soe Zeya Tun