LONDON--Oil prices were moderately lower Tuesday morning, after frenzied buying and selling on Monday saw prices plunge to multiyear lows and then rebound.
Prices remained volatile on Tuesday with Brent crude dipping below $72 a barrel in early London trading before rallying to touch $73 a barrel.
By midmorning, Brent crude for January delivery was down 52 cents at $72.01 a barrel on ICE Futures Europe. WTI for January was down 68 cents at $68.12 on the New York Mercantile Exchange.
The "radical turnaround" on Monday was probably a technical countermovement after the slump at the end of last week, according to Commerzbank analysts.
Prices had fallen sharply on Thursday and Friday after The Organization of the Petroleum Exporting Countries declined to cut its production runs and thereby alleviate the global glut of oil that has been pressing on prices for several months. Oil prices are down about 35% from their peak in mid-June.
The Commerzbank analysts said that low prices may be affecting investment decisions among producers, as the number of new shale oil rigs approved in the U.S. declined by 15% in October. Shale oil and gas fields in the U.S. have lifted global production in recent years, but some analysts have said not all projects may be viable at current oil prices.
After the OPEC-related turmoil, markets are beginning to refocus attention on the coming months.
Research firm Energy Aspects says that there will be an oversupply of crude oil in the first half of next year, and that there will only be a limited reaction from suppliers, which means inventories are likely to rise. That will prevent any significant rebound in prices, it said.
"Even once the initial selling frenzy is over, the upward momentum will be capped due to rising inventories...Prices are likely to settle in a new range of $70-$80 per barrel" in the first half of next year, Energy Aspects said.
ICE gas oil for December changed hands at $649.50 a metric ton, up $2.75. Gasoline for January delivery was down 48 points at $1.8762 a gallon.
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(END) Dow Jones Newswires