NEW YORK Crude prices steadied on Friday, supported by higher stock prices on Wall Street, but oil was still headed for a 10 percent weekly decline as global oversupply and a bleak demand outlook made it hard to guess the market's bottom.
Over the past four days, futures of global benchmark Brent and U.S. West Texas Intermediate (WTI) crude slid sharply, hitting 12-year lows, after China's stock market plunge this week roiled global markets.
By Friday noon, oil was about flat, recovering from an earlier slide of more than 2 percent, as shares on Wall Street rose and the dollar did not gain much despite robust U.S. jobs growth in December.
Brent was on track to a weekly loss of 10 percent, close to the 11 percent drop in the opening week of 2015, which was a record loss for oil in the first full trading week of any year.
"It is extremely difficult to forecast the exact bottom," Hans van Cleef, senior energy economist at ABN Amro, told the Reuters Global Oil Forum.
"The sentiment is still extremely negative and short positions are still at excessive levels. So, downside risks still remain. That makes it also hard to pinpoint the timing of the expected recovery."
ABN Amro cut its 2016 Brent and WTI price forecast to $50 per barrel from its prior view of $65 and $60, respectively.
Brent LCOc1 was down 10 cents at $33.71 a barrel by 12:29 p.m. EST (1729 GMT). It hit a session low of $32.78, after sliding on Thursday to $32.16, the lowest since April 2004.
U.S. West Texas Intermediate (WTI) CLc1 was up 33 cents at $33.60 a barrel. It fell to a session low of $32.64, after hitting $32.10 a day ago, the lowest since December 2013.
The dollar was up 0.5 percent after the U.S. Labor Department reported a greater-than-expected 292,000 new nonfarm jobs in December. A stronger dollar makes oil, priced in the greenback, less affordable to holders of the euro and other currencies.
"In my view, crude is still just a number on screen with little implications for most of the people and computers that are actively trading," said Scott Shelton, energy broker and commodities specialist at ICAP in Durham, North Carolina.
"It will keep going down until the equity world stops selling off."
The options market indicates concerns oil prices can fall further. Some investors are acquiring put options giving them the right to sell at $25 a barrel, anticipating that Brent will fall below that, and the costs of those options are soaring.
Barclays said it expects Chinese oil demand to grow by 300,000 Barrels per day (bpd) in 2016, down from an estimated 510,000 bpd last year. But the bank expects crude imports into China to be boosted by inventory build-up and higher quotas for teapot refineries to import crude.
Over the past year, the world has been producing 1.5 million barrels per day more oil than it consumes. OPEC and the International Energy Agency expect global demand growth to slow in 2016 to around 1.20-1.25 million barrels per day from a very high 1.8 million bpd in 2015.
(Additional reporting by Ahmad Ghaddar in London and Meeyoung Cho in Seoul; Editing by William Hardy and David Gregorio)
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Updated Date: Jan 08, 2016 18:14:22 IST