By Karolin Schaps and Ahmad Ghaddar
LONDON (Reuters) - Oil prices edged slightly higher on Tuesday after falling to 11-year lows in the previous session, thouh bearish outlooks for 2016 capped gains.
U.S. West Texas Intermediate (WTI) crude futures were 26 cents higher at $36.07 a barrel by 1316 GMT, having touched their lowest since 2009 at $33.98 in the previous session. Brent futures rose by 7 cents to $36.42 a barrel, rebounding from an 11-year low of $36.04 hit on Monday.
"The sentiment has been very negative, and ahead of the holidays people tend to close some of the speculative positions," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.
Saudi Arabia, the world's largest oil exporter, said it had shot down a ballistic missile that was heading towards its city of Jizan, where a new refinery and oil terminal are under construction. Saudi Aramco said all its facilities in the area were "in safe and normal operation".
However, concerns about supply continuing to outstrip demand next year limited gains.
"We view the oversupply as continuing well into next year before rebalancing in the fourth quarter 2016," Goldman Sachs said in a report circulated on Tuesday.
"Our base case remains that the global oil stock build will on aggregate remain shy of storage capacity, although the storage buffer has once again narrowed."
The bank added that a higher than expected 1.5 million barrels a day global market imbalance in this quarter is likely to extend into the first half of 2016 because of milder than usual weather weighing on demand.
Energy Aspects also expects the market to rebalance towards the end of next year but said in a report on Tuesday that "the pace of inventory drawdown will depend on OPEC output".
Lower oil prices have weighed heavily on the finances of OPEC members. Iran's draft budget for the next financial year starting on March 20 is 2.6 percent smaller than this year's.
Nigeria, meanwhile, expects a budget deficit of about 2.2 trillion naira ($11 billion) in 2016.
The weather provided a further bearish element as an unusually mild start to the winter in the northern hemisphere dents demand for heating oil.
BNP Paribas said the number of U.S. and European heating days had been 30 percent and 39 percent below the 10-year average since Dec. 7 respectively and that the number of days on which heating is required were expected to be 23-24 percent lower than normal until Jan. 4.
Russian oil output has reached a post-Soviet era high but Energy Minister Alexander Novak said in an interview with Kommersant newspaper on Tuesday that Russian oil production could start falling in 2017 if a tough taxation regime continues.
North Sea production from Britain and Norway is expected to rise this year because of new fields coming on stream and lower than usual maintenance outages, JBC Energy analysts said.
(Additional reporting by Henning Gloystein in Singapore; Editing by William Hardy and David Goodman)
