Investing.com -- U.S. crude futures rallied in afternoon trading amid heavy profit taking, after briefly dropping below $35 a barrel earlier in Monday's session to fall to fresh multi-year lows.
On the New York Mercantile Exchange, WTI crude for January delivery traded in a broad range between $34.54 and $36.68 a barrel, before settling at $36.34, up 0.72 or 2.01% on the session. With the strong gains, U.S. crude futures ended a seven-day losing skid when they plummeted by roughly 13% to six-year lows. WTI crude is approaching its lowest level since the Financial Crisis when it slumped to $32.40 in December, 2008.
On the Intercontinental Exchange (ICE), brent crude for January delivery wavered between $36.76 and $38.68 a barrel, before closing at $38.15, down 0.17 or 0.49% on the day. North Sea brent futures are close to falling to their lowest level since mid-2004 when they traded at $36.20. Brent crude futures also fell by more than 10% last week in the wake of OPEC's decision to leave its production ceiling unchanged at above 30 million barrels per day.
Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $1.81, below Friday's level of $2.28 at the close of trading.
Investors continued to digest bearish forecasts from last week, as energy market worldwide remained oversaturated by a glut of excess supply. On Friday, the International Energy Agency (IEA) projected that global demand growth will slow considerably over the next year, increasing the gap in the supply-demand imbalance worldwide. In 2016, the Paris-based IEA expects that global demand will grow by 1.2 million barrels per day, down from its 2015 expectations for growth of 1.8 million bpd. In addition, the IEA expects non-OPEC production to decrease by 600,000 bpd in 2016, as high-priced U.S. shale producers continue to struggle to keep pace with OPEC powers such as Saudi Arabia, which can afford to drill at lower prices with abundant supplies in reserve.
U.S. producers, meanwhile, are clinging to the hope that crude prices can eclipse the so-called "shale band" above $60 a barrel over the next year, allowing them to pump oil at a higher rate. While U.S. crude output fell below 9.2 million barrels per day last week, it still remains near levels from earlier in the summer it peaked at its highest rate in more than 40 years.
Also, last week OPEC said it pumped 31.695 million barrels of crude per day in November, an increase of 230,100 from its level a month earlier. Though production in Saudi Arabia fell slightly by 25,000 bpd to 10.13 million bpd last month, it was offset by a 248,000 bpd increase in output from Iraq.
Elsewhere, U.S. president Barack Obama said at the Pentagon on Monday that the nation's strategy against the Islamic State is moving forward with a "great sense of urgency," as he continues to ward off criticism for not taking a more aggressive stance against ISIL forces in the Middle East. Energy traders are sensitive to any news of heightened geopolitical instability in the region.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.15% to an intraday low of 97.31. Earlier this month, the index surged above 100 to a fresh 12-month high. Dollar-denominated commodities such as crude become more expensive for foreign investors when the dollar appreciates.
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