Oil rebounded after prices dipped below $35 a barrel for the first time since 2009, prompting traders to buy back some of their record bearish bets. West Texas Intermediate futures rose for the first time in seven days.
In the Senate, negotiators were nearing a deal to allow unfettered crude oil exports for the first time in 40 years, though differences remain on renewable-energy tax credits that Democrats are demanding in return, according to people close to the discussions. Prices fell earlier on remarks from an Iranian oil official who said there’s “absolutely no chance” his country will delay its plan to boost shipments, even as prices slip.
Oil slumped last week to levels last seen during the global financial crisis, while speculators increased bets on falling U.S. crude prices to an all-time high after the Organization of Petroleum Exporting Countries effectively abandoned production limits. The supply glut will persist at least until late 2016 as demand growth slows and OPEC shows “renewed determination” to maximize output, according to the International Energy Agency.
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West Texas Intermediate for January delivery climbed 69 cents to settle at $36.31 a barrel on the New York Mercantile Exchange. It touched $34.53, the lowest since February 2009. Brent for January settlement slipped 1 cent to end the session at $37.92 a barrel on the London-based ICE Futures Europe exchange, the lowest close since Dec. 24, 2008.
While any agreement could still collapse in the coming days — the deal faces opposition in the House — lawmakers are weighing the extension of solar and wind tax credits for as long as five years in exchange for lifting the crude-export restrictions, established to counter the energy shortages of the 1970s.
Bipartisan leaders in the Senate were already near a deal and faced resistance from House Democrats and some Republicans. On Monday, House Democrats said they were willing to discuss a plan, depending on what concessions they would get in exchange, the aide said.
“If the ban is lifted, the Brent-WTI spread will be crushed,” said Tom Finlon, director of Energy Analytics Group. “Refinery margins in the U.S. will shrink. U.S. refiners have had the advantage of using captive crude.”
OPEC, which set aside its output quota at a Dec. 4 meeting, is displaying hardened resolve to maintain sales, the IEA said in its monthly report Friday.
Natural gas tumbled to the lowest level since January 2002 amid forecasts that mild weather will persist through the end of the month. Futures fell as much as 6.4 percent to $1.862 per million British thermal units on the Nymex.