Oil prices were mixed in Asian trade today after rebounding from sub-USD 35 levels in New York, but traders were braced for more downward pressure ahead of an expected hike in US interest rates.
With global oversupply still dictating price trends, West Texas Intermediate for delivery in January was up two cents at USD 36.33 by 0330 GMT, while Brent crude for January dipped four cents to USD 37.88.
WTI had fallen briefly in New York below USD 35 a barrel, the lowest levels since February 2009 during the global financial crisis.
Ted Sloup of iiTrader.com called the rebound “a healthy correction” in a technically oversold market but added that the mood was “still very bearish” as investors continued to worry about global oversupply.
BMI research said in a report that more downside pressure is expected in the coming months.
“Oil prices will remain anchored by oversupply,” it said, predicting that the global surplus “will only narrow significantly post-2018.”
Prices have fallen more than 60 per cent from levels above $100 in June last year owing to slack global demand and a slowdown in key markets including China.
Also, the world market is awash with the commodity as the OPEC exporters’ group refuses to cap production in a move to preserve its market share, while Iran is expected to restart pumping its own crude for shipment in 2016.
An anticipated US interest rate hike on Wednesday could put further pressure on oil demand because the commodity is priced in dollars, making it more expensive for economies with weaker currencies.