Crude oil prices erased earlier gains and are back to their lows below $27 a barrel in the face of reports surfacing that Iran is willing to support Saudi Arabia as well as other OPEC members to contain the oil decline. Iran’s Oil Minister Bijan Zangeneh said that they are ready to extend cooperation to OPEC countries to overcome the current slump.
The statement came after the minister had indicated his reluctance over joining in a conversation with OPEC earlier in January stating that the move is politically motivated. Also, the country had pledged to produce as much as 500,000 barrels per day after the lifting of foreign sanctions.
Responding to this news, crude oil prices rebounded partially, but then collapsed again. Brent crude is now at $30.70 while WTI is back down to $27. The collapse followed a brief blip upward due to bargain buying in Asia.
The sentiment around crude continued to deteriorate yesterday after the International Energy Agency (IEA) released a report indicating that the world will maintain huge oil reserves throughout 2016 for lack of demand alongside an oversupplied market. Also, the agency curbed speculations of a possible meet between OPEC and non-OPEC countries stating that the event is not likely to happen.
Oil investors also turned bearish despite a report from the EIA on inventories, which recorded a surprise draw last week. EIA has already trimmed its global oil demand growth outlook by 180,000 barrels a day.
Meanwhile, the American Petroleum Institute (API) had earlier reported an increase of 2.4 million barrels in the US oil reserves last week. The revelation of data led ANZ to project continuing weakness in the commodity throughout the week.
iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) had wiped off as much as 4.25% of its value a day earlier to close the session at $4.51.