SINGAPORE (Reuters) – Oil prices on Monday fell short of some 8-percent plunge, but Brent failed to hold above $ 60 a barrel amid generally weak financial markets.
FILE PHOTO: Oil springs out of a spout from Edwin Drake's original 1859 well that launched the modern petroleum industry at the Drake Well Museum and Park in Titusville, Pennsylvania U.S., October 5, 2017. REUTERS / Brendan McDermid / File Photo
Front-month Brent crude oil futures LCOc1 had risen by 96 cents, or 1.6 percent, to $ 59.76 per barrel by 0745 GMT.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 62 cents, or 1.2 percent, at $ 51.04 per barrel.
The gains partly made up for Friday's selloff, which traders have already dubbed 'Black Friday'.
Reacting to Friday's falls in Brent and WTI, China's Shanghai crude futures on Monday ISCcv1 fell by 5 percent, hitting their daily downside-limit.
Judging by exchange date, traders are preparing for more price falls.
WTI crude futures, which would profit from further declines, have surged from record lows in July to the highest number of short positions since October 2017.
(GRAPHIC: Price for Brent put options – tmsnrt.rs/2R8bJvM)
In February Brent crude oil futures at $ 55 LCO5500N9 and $ 50 per barrel LCO5000N9 has surged to record levels since October.
(GRAPHIC: Brent put options – tmsnrt.rs/2R9W1jK)
The downward pressure comes from surging supply and a slowdown in demand growth which is expected to result in an overhang supply by next year.
"2019 will be a choppy year for the oil market as questions surrounding the prospect of a slowing global economy and a surplus supply are expected to increase," analysts at Fitch Solutions said on Monday.
Fitch said that even an expected supply cut led by the Organization of Petroleum Exporting Countries (OPEC) following an official meeting on Dec. 6 "may not be enough to counteract the bearish forces".
(GRAPHIC: Global crude oil supply & demand balance – tmsnrt.rs/2PKtzIy)
Oil markets are also being affected by a downturn in wider financial markets.
"2018 clearly marked the end of the 10-year Asian credit bull market due to tightening financial conditions in Asia (especially China), and we expect this to remain the case in 2019," Morgan Stanley said in a note released on Sunday.
"We do not think that we are at the bottom of the cycle yet," the U.S. bank said.
Oil markets have also been weighed down by a strong US-dollar .DXY, which has surged against most other currencies this year, thanks to rising interest rates that have pulled investor money out of other currencies and also assets like oil, which are seen as more risky than the greenback.
"Anything denominated against the USD is under pressure right now," said McKenna.
Another risk to global trade and overall economic growth is the trade between the world's two largest economies, the United States and China.
"The U.S.-China trade conflict poses a downside risk as we forecast the U.S. to impose 25 percent tariffs on all China imports by Q1 2019," U.S. bank J.P. Morgan said in a note published on Friday.
(GRAPHIC: Oil prices vs Asian stock market – tmsnrt.rs/2R8dwku)
Reporting by Henning Gloystein; Editing by Joseph Radford and Richard Pullin