Oil bounces back above $36 US even as Iran gets ready to pump more crude

Crude prices rose after six straight days of losses on Monday, even as Iran spooked investors over the weekend with its plans to flood the market with even more cheap crude.

Early in the day, West Texas Intermediatefell below $35 US a barrel for the first time since Feb. 18, 2009. But it recovered and closed up 69 cents, or 1.9 per cent, at $36.31 a barrel in New York.

Before Monday, oil hadbeen battered by a constant barrage of negative outlooks. The latest catalyst wasweekend comments from Iran's deputy oil ministerthat there is "absolutely no chance" the country will hold off on production to keep prices up while it re-enters the market.

Oil's problem has hinged onoversupply, a situation that would be exacerbated when Iran is once again allowed to start selling oil to the world, after theUN lifts sanctions, sometime in 2016, that havebanished the country from selling oil due to itsnuclear activities.

"Crude cannot sustain any kind of significant rally until we see the fundamentals begin to shift," said Matthew Perry, partner with Kronenberg Capital Advisors. "The market's really sore. It's very, very oversold."

Once sanctions are lifted,a few million more barrels of oil will flow into the market daily. The oil market is currently oversupplied to the tune of about three million barrels a day.

Iran's deputyoil minister saidhis country is eager to start selling oil again at any price, as it needs revenue.

"The price can drop as low as possible as we are prepared for the worst scenario," HosseinZamaninia said.

Loonie flat

The loonie, which is closely tied to the value of oil,hovered atjust under 73 cents for most of the day, up by about a tenthof a cent at 72.81 when markets closed for the day.

The same couldn't be said of the TSX, however, which lost another 99points to12,689. That's the lowest level since October 2013.

The TSX's three biggest sectors materials, energy and finance were all lower.

"The tone is clearly negative today, but not nearly as negative as it was when you had a $34 handle on WTI, that was a key pivot point," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

Canada's benchmark stock index lost 4.3 per cent last week on a rough week for oil.