Oil prices gained slightly today, but held close to an 11-year low, pressured by a relentless build in oversupply, and as the dollar strengthened after the US Federal Reserve raised interest rates for the first time in nearly a decade.
Brent crude for February delivery rose 20 cents to $37.59 a barrel this morning. The global benchmark lost 3.3% in the previous session.
A dip below $36.20 will be the lowest since July 2004. Analysts said such a move in the run up to the end of the year would be likely.
Brent has tumbled from a high above $115 in June last year
Government data showed a surprise build in US inventories yesterday, adding to a global glut that has contributed to a near 17% slump this month alone.
West Texas Intermediate for January delivery was down 17 cents at $35.35. US crude fell nearly 5% yesterday.
Another potential source of supply for international markets would be US crude should lawmakers vote to lift a ban on exports as early as tomorrow.
The Fed raised rates last night, a sign it believes that the U.S. economy had largely overcome the calamity that was the 2007-2009 financial crisis.
Higher US rates typically support the dollar, making dollar-priced oil more costly for holders of other currencies and undermining demand. The dollar added around 1% against a basket of major currencies today.
Adding to the bearish global picture, OPEC producers see scant chance of a significant rise in oil prices in 2016 as extra Iranian production could add to the glut and the prospect of voluntary output restraint remains remote.
Goldman Sachs said it would take a further fall in oil prices to push OPEC into coordinated cuts in production to support prices.
"The one scenario where we could see OPEC cut output is one where fundamentals push prices down to the steep part of the cash-cost curve," the bank said in a note to clients.
"Such a cut would occur at lower prices and for now the market needs to rebalance through low prices," it added.