Oil prices tread water as ongoing supply glut is met by firm demand

SINGAPORE: Oil markets were treading water on Tuesday, supported by firm demand but weighed down by ongoing high supplies from producer club Opec and also the United States.

Brent crude futures, the international benchmark for oil prices, were at $48.39 per barrel at 0634 GMT, down 3 cents from their last close.

US West Texas Intermediate (WTI) crude futures were down 4 cents at $45.98 per barrel.

“We’re stuck in a range that, I think, will be tough to break out of without some kind of political factor coming into play,” said Matt Stanley, fuel broker at Freight Investor Services (FIS).

In a sign of strong demand, data on Monday showed refineries in China increased crude throughput in June to the second highest on record.

Despite struggled this, with oil markets oversupply have since 2014, resulting in a more than 50 per cent fall in prices since then.

A deal by the Organization of the Petroleum Exporting Countries with Russia and other non-Opec producers to cut supplies by around 1.8 million barrels per day (bpd) between January this year and March 2018 has so far not led to the tighter market and higher prices that producers have hoped for.

That’s because supplies from within Opec remain high largely due to rising output from Nigeria and Libya, two Opec states exempt from the pact, and increasing US production.