Dec. 20 (UPI) — Crude oil prices were nearly flat early Wednesday after a Tuesday selloff, as continued bearishness failed to attract buyers even at the lower price levels and investors turned to other instruments like bonds.
As of 8:43 a.m. EST West Texas Intermediate front-month future prices were barely 0.2 percent higher at $46.71 per barrel while Brent was unchanged at $56.30 per barrel.
On Tuesday, prices fell sharply with WTI declining from a Monday close of $49.16 per barrel to $46.85 per barrel at the close of Tuesday, a 4.7 percent plunge.
But even the new recent lows failed to attract bargain hunters.
“Investors are bearish. Professional money managers are moving to bonds. The outlook for the global economy is getting worse. So folks don’t see a rally in oil prices,” Matt Badiali, senior research analyst at Banyan Hill Research, told UPI.
“The oil market is having some trouble for two reasons. First is the hangover from the Iran stuff. Between the U.S. and Saudi Arabia, they added 1.5 million barrels per day of extra oil into the market,” he said.
“That was to replace the 900,000 barrels per day that were supposed to come off when the sanctions kicked in…but they didn’t, so we have a lot of extra oil on the market now. At the same time, the outlook for demand is getting worse,” he said.
Amir Hekmati, oil futures spec trader at Lucid Energy, told UPI he believes the selloff was overdone, and would just keep the volatility ongoing.
“I don’t believe recent inventory builds warrant a $30 selloff in a matter of weeks,” he said.
“This is bad for the industry, and will affect capital exploration decision making going forward,” particularly for United States shale producers, he added.
“The February 2016 (WTI) low of $26 is not out of the question, However I feel this is a low probability. As they say, the cure for lower prices, is lower prices,” he added.
The recent sharp price declines, with Brent declining from a recent high of over $86 per barrel on October 3, may even create conditions for future sudden hikes at some point down the road with instability in some important OPEC producers like Libya and Venezuela.
Investors will be watching the Energy Information Administration release of U.S. inventory data scheduled for later Wednesday at 10:30 a.m. EST.