U.S. crude rose nearly 2 percent Monday, recovering slightly after moving within a hair of 11-year lows, but analysts and traders said it is still too early to declare the market has reached its bottom.
Both U.S. and global benchmark Brent crude have been tumbling downward since an OPEC meeting Dec. 4 at which the oil-producing countries removed their production ceiling, exacerbating global crude oversupply. Monday’s close marked the first significant rebound since the meeting.
Early in the day, both Brent and U.S. crude futures fell by as much as 4 percent to their lowest levels since the start of the 2008 financial crisis, before turning around midday in the United States.
Brent futures for January delivery LCOc1 settled down 1 cent at $37.92 a barrel. U.S. crude CLc1 rose 69 cents, or 1.94 percent, to $36.31.
The two benchmarks began to converge – a step toward eliminating the once-deep discount for U.S. crude – in an indication that the market is shifting structurally.
Early in the session, Brent traded just 13 cents above the $36.20 low set in December 2008. Below that level, it would be at its lowest since July 2004, when oil was rebounding from single-digits lows hit during the 1998 financial crisis and when talk of a commodities super-cycle was just beginning.
But the rebound from these near record lows may be short-lived.