Oil edged up from multi-month lows on Thursday, but prices remained under pressure from a supply glut that has persisted despite OPEC-led efforts to balance the market.
Brent crude futures were up 43 cents at $45.25 a barrel at 1229 GMT, after falling as low as $44.53 earlier in the day. They fell 2.6 percent in the previous session to $44.35, their lowest since November.
U.S. crude futures were up 30 cents at $42.83 a barrel, after also slipping earlier in the day. On Wednesday, they touched $42.05, their lowest intraday level since August 2016.
“Prices were pushed a bit too low,” Hans van Cleef, senior energy economist with ABN AMRO, said. “The people who believe in higher prices are stepping in.”
Since peaking in late February, crude has dropped around 20 percent, erasing gains at the end of the year in the wake of the initial OPEC-led production cut.
The Organization of the Petroleum Exporting Countries and other producers agreed to reduce output by 1.8 million barrels per day (bpd) from January for six months, and last month extended the deal for a further nine months.
But oversupply has persisted, particularly with output rising in Libya and Nigeria, which were exempt from the cuts due to unrest that had limited their output.
Nigeria’s crude oil exports are set to exceed 2 million bpd in August, the highest level planned for 17 months.
“This is a pretty concerning time for a lot of producers,” Michael Burns, oil and gas partner at law firm Ashurst, said.
“The question is whether OPEC will respond with further cuts or whether it needs to look again at its macro strategy for addressing low prices.”
A bigger-than-expected drop in U.S. crude stockpiles, and a drop in gasoline stocks, offered only short-lived support.
U.S. crude inventories fell by 2.5 million barrels in the week to June 16, surpassing analyst expectations for a decrease of 2.1 million barrels, data from the U.S. Energy Information Administration released on Wednesday showed.
Gasoline stocks fell by 578,000 barrels, compared with expectations for a seasonally unusual gain. [EIA/S]
Tropical storm Cindy traveling through the Gulf of Mexico, home to about 17 percent of U.S. crude and 5 percent of dry natural gas output, disrupted some operations, but did little to boost prices.
Overall, output is still increasing in the United States, where some shale producers can produce profitably even if oil prices drop below $40 a barrel.
Oil stocks in Europe’s Amsterdam-Rotterdam-Antwerp hub hit 64.2 million barrels in the week to June 16, the highest in a year, and some 24 percent above the January low, according to data from industry monitor Genscape.