Oil bounces up off four-year lows, analysts say slump not over

By Barani Krishnan

NEW YORK (Reuters) - Crude oil rose on Friday on buying support after the longest stretch of weekly losses that took prices to 2011 lows, but oversupply concerns made analysts skeptical of whether the rebound would continue.

Benchmark Brent crude rose as traders saw a bargain after Thursday's 3 percent slump and the near 4 percent loss in three earlier sessions. The global benchmark is almost $40 a barrel below its June high above $115, a 30 percent decline over five months.

U.S. crude futures climbed on expectations of higher demand for heating oil as forecasts called for a cold weekend in the Northeast and Midwest regions of the United States.

 

Brent's front-month contract was up $1.35 at $78.84 a barrel at 12:05 p.m. EST (1705 GMT.. It sank early to $76.76, its lowest since September 2010, and bounced to a session high of $79.64.

Brent is down 6 percent on the week for its biggest weekly decline since June 2012. It has dropped eight weeks in a row for its longest streak of weekly declines since 1988, when Reuters began keeping records.

U.S. crude was up 81 cents at $75.02 a barrel, after a session high of $75.42 and four-year low of $73.25.

"We're definitely seeing some covering before the weekend, though I wouldn't hold my breath longer-term," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

"The No. 1 concern in this market is oversupply. As long as OPEC looks powerless to cut enough production to put a floor beneath these prices, there will be no sea change in the long-term directional move lower."

Few analysts think the Organization of the Petroleum Exporting Countries will do much to prop up prices when the producer group meets on Nov. 27.

OPEC's barrel price for crude itself has fallen by $35.33 since late June, to $75.15 on Friday. [ID:nNrm2HMptw]

Smaller OPEC members such as Algeria and Venezuela are pushing to cut output. Qatar also expects to reduce production. But top oil exporter Saudi Arabia has not said it will cut output. [ID:nL6N0T34BG] [ID:nL6N0T33WC] [ID:nL2N0T21EA].

The International Energy Agency, which usually refrains from predicting oil prices, said in its monthly report prices could fall further in 2015, citing pressure from higher output from the United States and other non-OPEC producers. [ID:nL6N0T420Z]

(Additional reporting by Alex Lawler and Keith Wallis; Editing by William Hardy, Greg Mahlich, David Evans and David Gregorio)