Oil prices linger near seven-year lows

The decision by the OPEC oil producers grouping last week to maintain its lofty production levels continues to weigh on a market already awash with supplies as traders fix their sights on other developments that could influence prices.

US benchmark West Texas Intermediate (WTI) for January delivery was up two cents at $37.67 and Brent crude for January was trading 18 cents higher at $40.91 at around 0550 GMT.

WTI fell 5.8 percent to $37.65 in New York and Brent tumbled 5.3 percent to $40.73 in London on Monday, their lowest levels since February 2009.

Analysts said Tuesday’s slight rebound reflected some bargain-hunting ahead of the release on Wednesday of US commercial crude stockpiles, which will help gauge demand in the world’s top oil consumer.

A Bloomberg News survey estimated inventories probably rose for an 11th week, indicating softer demand.

Traders are also closely watching a meeting of the US central bank’s Federal Open Market Committee (FOMC) next week amid expectations that members will announce the first interest rate hike in over nine years.

An interest rate increase typically boosts the dollar, which would make dollar-priced oil more expensive to holders of weaker currencies. That usually leads to lower demand and softer prices.

“We expect the FOMC to begin the process of adjusting rates at its meeting… but we think only a gradual and limited adjustment of short-term interest rates will be needed to meet the FOMC’s macroeconomic objectives,” Nomura Securities said in a market commentary.

Oil prices have plunged from peaks above $100 a barrel in June last year largely due to the supply glut.

OPEC countries are currently producing an estimated 32 million barrels per day, above the group’s prior 30 million barrel target.