Investing.com - Oil prices edged higher on Tuesday, one day after tanking to multi-year lows on the back of persistent worries over ample global supplies.
On the ICE Futures Exchange in London, Brent oil for February delivery tacked on 14 cents, or 0.4%, to trade at $36.49 a barrel during U.S. morning hours. A day earlier, prices fell to $36.04, a level not seen since July 2004.
Brent prices are on track to post an annual decline of 36% in 2015, as oversupply concerns dominated market sentiment for most of the year.
Elsewhere, crude oil for delivery in February on the New York Mercantile Exchange inched up 50 cents, or 1.4%, to trade at $36.31 a barrel. On Monday, futures shed 25 cents, or 0.69%.
Nymex futures tanked to $34.29 on Friday, the lowest since February 2009, after data showed that the number of rigs drilling for oil in the U.S. increased by 17 to 541 last week, underlining concerns over robust domestic production.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 1.4 million barrels in the week ended December 18.
U.S. oil futures are down nearly 35% so far this year amid worries over ample domestic supplies.
Oil futures have fallen sharply this month after the Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce a glut of oversupply on global energy markets.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at 18 cents, compared to 54 cents by close of trade on Monday.
Brent's premium to WTI collapsed to the smallest level in years on signs that the U.S. oil market is likely to grow tighter following Congress' decision to lift a 40-year old ban on domestic oil exports, while a global glut gets worse in 2016 due to soaring production in Saudi Arabia and Russia.
Oversupply issue will be exacerbated further once Iran returns to the global oil market early next year after western-imposed sanctions are lifted. Analysts say the country could quickly ramp up production by around 500,000 barrels, adding to the glut of oil that has sent prices tumbling.
Market experts predict Brent's premium over U.S. crude to flip into a discount in the coming weeks. The gap between the two benchmarks is down over 95% since its 2015 peak reached earlier in the year.