[KUWAIT CITY] Oil prices are unlikely to fall further after a plunge of nearly 60 per cent since June, Iraqi Oil Minister Adel Abdul Mahdi said on Wednesday.
"Our estimate is that the prices have reached the bottom. It is very difficult to drop lower than this," Abdul Mahdi told a conference in Kuwait.
"We do not find any real justification for the big and persistent drop in oil prices," the Iraqi minister said.
"A number of factors will work to correct oil prices upward." Oil rebounded in Asia Wednesday as traders bought the commodity at cheaper prices following a slide to near six-year lows, analysts said.
But analysts do not expect the upturn to last, as weakening global demand and a supply glut show no signs of abating.
US benchmark West Texas Intermediate for March delivery was up 44 US cents at US$46.91 in afternoon trade. The February contract expired on Tuesday at US$46.39, down US$2.30 from the day before and not far from its lowest level since March 2009.
Brent North Sea crude for March, the international benchmark, added 44 US cents to US$48.42.
The Iraqi minister said current low oil prices will knock out part of the high-cost production, especially shale oil.
This is likely to reduce the amount of surplus production currently estimated at 2.5 million barrels per day, and support prices, he said.
The world's biggest miner BHP Billiton said on Wednesday that it was cutting back its operating US shale oil rigs by 40 per cent because of the price slump, but still expected output to rise for the financial year.
BHP said it would reduce the number of rigs from 26 to 16 by the end of June. Shale volumes were still forecast to grow by approximately 50 per cent during the period.