Oil prices steady, but oversupply a concern
Oil prices steadied on Wednesday, consolidating after a six-week rout driven by global oversupply and concerns about falling demand in Asian economies and the United States.
U.S. crude oil futures CLc1, also known as West Texas Intermediate (WTI), were down 20 cents at $42.42 a barrel by 1020 GMT. The front-month, September, U.S. contract expires on Thursday. North Sea Brent crude LCOc1 held steady at $48.81 a barrel.
"I think the market has pushed too low and too fast," ABN Amro energy economist Hans van Cleef said. He added that, although he could see oil prices rebounding in the coming weeks, he thought they would remain low into next year.
Oil has lost about a third of its value since June and prices have been hovering just above six-year lows for the past week. The downward trend has been driven by global oversupply and record stockpile levels, analysts say.
Many analysts said they expect some temporary price stabilization as people take profits from short positions. But they said the downward price trend was likely to continue unless there was a significant reduction in global supply.
"Any recovery in WTI prices from a six-year low may be short-lived with the U.S. entering the slow demand period in September," ANZ bank said.
The American Petroleum Institute reported on Tuesday that U.S. crude stocks had fallen by 2.3 million barrels in the week ended Aug. 14. U.S. government data on crude stockpiles is due at 10:30 a.m. EST (1430 GMT) on Wednesday.
However, U.S. oil production is at record levels and producer costs appear to be declining, with no output scale-back anticipated.
"The recent drop in the price of oil confirms ... the global commitment producers have to their current levels of (high) output," said Scott Cockerham, managing director Houston-based Conway MacKenzie's Energy Advisory Services.