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Crude oil prices drop more than 1 percent as weak outlook prevails

Published 30/12/2015, 12:45 pm
© Reuters.  Crude oil prices drop more than 1 percent as weak outlook prevails
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* U.S., European cold snap to be short-lived

* Unusually warm weather has so far dominated winter

By Henning Gloystein

SINGAPORE, Dec 30 (Reuters) - Crude oil futures fell around half a dollar early on Wednesday as the market remained under pressure from slowing demand and high supplies, while forecasts that a cold snap in Europe and the United States would be short-lived also hurt prices.

Crude prices have plunged by two-thirds since mid-2014 as soaring output from the Organization of the Petroleum Exporting Countries, Russia and the United States led to a global surplus of between half a million and 2 million barrels per day.

More recently, a slowing demand outlook, especially in Asia but also Europe, has started dragging on prices. urn:newsml:reuters.com:*:nL3N14I05N

Front-month U.S. West Texas Intermediate crude futures CLc1 were trading at $37.18 per barrel at 0140 GMT, down 69 cents or 1.82 percent from their last settlement. Brent futures LCOc1 were down 47 cents, or 1.24 percent, to $37.32 a barrel.

Traders said the price falls were largely a result of a weak outlook for next year and the closing of 2015 trade books.

"The 2016 outlook is for lower prices, especially early next year. Many are closing their last long positions for the year today as nobody wants to come back in January and be surprised badly. Better start with a clean sheet," a trader said.

Forecasts that an upcoming cold weather in Europe will only be short-lived could also hurt crude prices.

U.S. crude and Brent had both rallied about 3 percent in the previous session on hopes that a drop in temperatures would buoy demand for oil for heating purposes.

But weather data in Thomson Reuters Eikon shows that average continental European temperatures are expected to drop from around 5 degrees Celsius currently towards and slightly below the seasonal norm of 2.4 degrees by Jan. 3 before rising to as high as 6-8 degrees by Jan. 7.

For most of the United States, a brief cold period is also not expected to last for much more than a week. (Editing by Himani Sarkar)

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