Oil prices edged up yesterday following reports of falling stockpiles and rising refinery activity, but analysts said the market would remain under pressure for the rest of the year and into 2016. Industry group American Petroleum Institute (API) has said that US crude stockpiles fell last week by 482,000 barrels due partly to higher refinery runs. This helped push front-month US crude futures CLc1 up 29 cents from their last settlement to $40.96 a barrel at 0552 GMT. The gain followed an over $1 fall the previous session. Official inventory data is due later today from the US government’s Energy Information Administration (EIA). Internationally traded Brent crude futures LCOc1 were up 35 cents at $43.92 per barrel. Despite the slight gains yesterday, most analysts expect prices to remain at low levels for the rest of the year and into 2016 as production continues to outpace demand. “Oil market sentiment has turned back to ‘max bearish’ mode. Talk of $20 oil is back,” consultancy Energy Aspects said in a note this week. At the core of the bearish sentiment is that every day between 0.7-2.5 million barrels of oil per day are being produced in excess of demand, leading to a glut that is testing the logistics of oil markets. “Inventory overhang is the topic du jour in the oil markets. OECD crude inventories 20 percent above their 5-year seasonal average,” said Jefferies bank. “We expect that inventories will build counter-seasonally (stocks usually fall in winter) in 4Q15 and that the market will remain oversupplied through 1H16,” it added.
Source; Reuters
