Brent futures, the global benchmark, ended at a four month low on concerns over the persistent global supply glut while West Texas Intermediate oil, the US benchmark, ended higher ahead of the EIA’s weekly inventory data.
West Texas intermediate crude snapped a straight four sessions losing streak recovering from intraday lows of $47 a barrel to end 59 cents or 1.2% higher at $47.98 a barrel on the New York Mercantile Exchange.
Brent futures slipped 17 cents or 0.3% at $53.30 a barrel.
“We’re getting a bounce of sorts but I’ll be selling into any strength I see,” Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Holllow, New York, told Reuters.
Both the benchmarks recently slipped into bear market after slipping more than 20% from their most recent highs on concerns that the supply glut would persist for long.
The global supply is still strong despite austerity measures by most companies and analysts warn that demand is set to go down at the end of the US peak driving season in summer.
Also weighing on the prices was another drop in Chinese equities and expectations that Iran would increase its crude output once economic sanction against it are lifted as part of the nuclear agreement with the world powers.
The decline in Chinese stocks and the recent weaker than expected economic data from the countries also cast doubts on the demand levels in the world’s second largest consumer of oil.
Most analysts expect oil prices to head lower with most of the factors pressuring the commodity expected to remain for some time.
“WTI oil prices may easily test the very low $40s soon. There is no incentive for producers to cut back but globally, [capital expenditures] for next year are getting slashed,” Richard Hastings, macro strategist at Global Hunter Securities, told Market Watch.
“Even that is no assurance that production will contract enough to fix this. The next few months are quite unstable, or until external events get this sled off the ski slope.”
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