Oil futures inched up in early Asian trading on Friday, but remained near three-month lows after a persistent supply glut has cut prices by up to 13 percent since the start of November.
Front-month Brent futures for January climbed 14 cents at $44.32 a barrel as of 0227 GMT, following the previous session’s 4 cent gain.
U.S. crude’s West Texas Intermediate (WTI) futures were quoted 3 cents higher at $40.57 a barrel after settling down 21 cents at $40.54 on the previous session $44.18 a barrel.
“Oil markets are really moving range bound…mainly because fundamentals have yet to change,” Daniel Ang, an investment analyst at Phillip Futures Pte Ltd, said. “Markets are a bit fearful that Iranian oil could come in.”
Crude futures have already lost around 60 percent of their value since mid-2014 as supply exceeds demand by roughly 0.7 million to 2.5 million barrels per day to create a glut that analysts say will last well into 2016.
Market data suggests that oil traders are preparing for another downturn in prices by March 2016, as what is expected to be an unusually warm winter dents demand just as Iran’s resurgent crude exports hit global markets after sanctions are ended.
“Uncertainty is so high in the world’s crude markets which are in rebalancing procedures. Prices will have high volatility in 2016 and particularly in the first half there is a high risk of falling prices,” Kang Yoo-jin, commodities analyst at NH Investment and Securities based in Seoul, said in a report.
ANZ bank said on Friday: “The weakness in the front end of the curve has pushed the market to deep contango again.”
The bank noted the spread between near-month futures and December 2016 contract prices; has hit a new record of nearly $8 a barrel.
Asian shares looked set to hold on to this week’s gains, while the dollar took a breather on Friday after stepping back from seven-month highs as investors grappled with the prospects of higher U.S. borrowing costs and slower global economic growth.