BEIJING: Brent crude held steady above US$ 56 a barrel on Wednesday, and U.S. crude rose briefly more than US$ 1, after a smaller than expected rise in U.S. crude stocks were viewed by some as a sign that a supply glut was starting to abate.
The gains in futures, however, were capped by a warning from the International Energy Agency (IEA) that ample global production would still swell world inventories before investment cuts begin to significantly dent output.
“The supply growth in 2015 is likely to continue unabated, albeit at a somewhat lower rate,” Fereidun Fesharaki at Facts Global Energy said in a note on Wednesday.
“This all means a weak market in 2015 and even lower oil prices. Demand rebound will not save the oil market,” he said.
Brent March crude futures had ticked down 13 cent to US$ 56.30 by 0334 GMT, after losing US$ 1.91 during the previous session on the IEA expectations.
U.S. March crude futures were trading up 30 cents atUS$ 50.32, after falling US$ 2.84 in the previous session.
Oil prices are expected to test support levels, with Brent crude showing a good chance of breaking below US$ 56.21, while U.S. crude could potentially break below US$ 49.88, according to Wang Tao, a Reuters market analyst.
U.S. crude stockpiles rose last week less than half of what analysts had expected as refineries cut output, data from industry group the American Petroleum Institute (API) showed after the oil market settled on Tuesday.
U.S. crude stocks rose by 1.6 million barrels in the week to Feb. 6, the API said, compared with expectations for a increase of 3.7 million barrels.
Earlier on Tuesday the IEA had said the United States will remain the world’s top source of oil supply growth up to 2020, even after the recent collapse in prices.
That bearish outlook was supported by the U.S. Energy Information Administration (EIA), which kept its 2015 and 2016 domestic oil output forecasts virtually unchanged from the previous month.
The EIA expects total U.S. oil production in 2015 to be 9.3 million bpd, slightly lower than the 9.31 million bpd forecast in last month’s short-term energy outlook.
The head of Kremlin-controlled energy giant Rosneft said on Tuesday that OPEC had erred in not cutting output in a broadside blaming low oil prices on forces from financial speculators to U.S government policy.
(Additional Reporting by Meeyoung Cho in SEOUL; Editing by Richard Pullin and Tom Hogue)