LONDON: Oil stabilised on Wednesday after one of its biggest falls for years, but remained under pressure from oversupply and concern that a slowing global economy would depress demand for fuel.
Benchmark Brent crude oil was up 30 cents at $56.56 a barrel by 0840 GMT, after dropping 5.6 per cent on Tuesday and at one point hitting a 14-month low.
US light crude was 20 cents higher at $46.44, after plunging 7.3 per cent in the previous session when it touched its lowest since August 2017.
Both benchmarks have fallen more than 30 per cent since the beginning of October as crude supply from the Middle East, Russia and the United States has outstripped demand, filling oil tanks.
“The market is experiencing price carnage, maximum pain and considerable downside pressure,” said Robin Bieber, analyst at London brokerage PVM Oil. “The trend is down.” Tuesday’s sell-off was encouraged by a sharp fall in world stock markets after signs that economic growth, and hence demand for energy, was slowing. There were also worries that higher US interest rates could slow US growth.
Adding to worries about oversupply, the American Petroleum Institute said on Tuesday that US crude stocks rose unexpectedly last week, while gasoline inventories increased.
If the build in US crude stockpiles is confirmed by US government data on Wednesday, it will be the first increase in three weeks.
The Organisation of the Petroleum Exporting Countries and other oil producers including Russia agreed this month to curb output by 1.2 million bpd, equivalent to more than 1 per cent of global demand, in an attempt to drain tanks and boost prices. — Reuters
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