Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.
Find out more at btsub.sg/promo
[SINGAPORE] Oil prices stabilised on Tuesday, supported by strong Chinese fuel consumption and halting a slide to 2003 levels earlier in the week after the full return of Iran to markets added to an already huge supply overhang.
Front-month Brent crude futures were trading at US$28.94 per barrel at 0439 GMT, up 39 cents from their last settlement.
Traders said prices were supported by strong oil data from China, where preliminary oil demand for 2015 was at a record 10.32 million barrels per day, up 2.5 per cent from a year ago, despite a slowing economy.
But Brent struggled to break back above US$29 a barrel as Iran's return to world oil markets weighed.
US crude futures were at US$29.31 a barrel, down 11 cents but defending its premium over Brent.
The US premium over Brent hit its highest level since 2010 on Monday as Iran's oil will be exported to Brent-priced Europe and Asia while regulations still restrict it from going to the United States.
The US government has also revoked a 40-year-old ban on its crude reserves, resulting in oil flows out of the US crude price zone and into Brent.
Overall, prices fell to their lowest since 2003 on Monday as western sanctions against Iran were lifted. Tehran then ordered a sharp increase in output to take immediate advantage.
Despite Tuesday's firmer prices, most analysts remained bearish. "It is clear that investor sentiment is driving oil prices... Bearish bets are at their highest level since 1983, indicating heightened concerns around Iran oil flooding the market," ANZ bank analysts said in a note on Tuesday.
Oil prices have fallen over 70 per cent in the past 18 months as exporters around the world pump out over a million barrels of crude every day in excess of demand. Since January, the prospect of the lifting of sanctions on Iran accelerated the rout.
Most analysts expect Iran's full return to oil markets to be relatively slow due to the need to overhaul its infrastructure following years of under-investment, but Iran is also estimated to have stored 12-14 million barrels of crude and 24 million barrels of condensates for immediate sale.
Goldman Sachs said that Iran's production would rise by 285,000 barrels per day (bpd) year-on-year in 2016 while BMI Research said the rise would be by 400,000 bpd.
In Opec-member Venezuela, state-owned producer PDVSA requested partners to pay for naphtha imports, which it is contractually obliged to provide itself, to produce exportable crudes.