LONDON: Crude oil dropped in early Asian trade on Thursday after a volatile session last day, when prices bounced back sharply from near-six-year lows that affected a global oversupply.
Wednesday’s 4.5 percent surge in Brent crude futures LCOc1, the biggest percentage gain since June 2012, came as traders covered themselves on expiring options.
However, the tone remains bearish because of the supply glut and on Thursday Brent had fallen back 56 cents to $48.13 a barrel by 0323 GMT. On Tuesday it hit $45.19, the lowest since March 2009.
U.S. crude CLc1 was trading at $48.14 a barrel, down 34 cents.
Stocks data from the U.S. Energy Information Administration added to the worries over excess supply. [EIA/S]
“EIA data showed U.S. crude stockpiles rose to 5.4 million barrels in the last week, far more than analysts’ expectations, pointing to continued oversupply in the market,” ANZ bank said in a morning trading note.
The bank said in a separate note on Thursday that it saw a 60 percent chance Brent would range between $40 and $60 a barrel in the first half of the year, a 35 percent possibility of prices falling to $35-45 during that time and only a small chance of prices going up to $60-80 a barrel.
“A war for output market share means oil prices are skewed to the downside. Funds are unwinding a large positive investment premium, but further selling is possible,” ANZ said.
The glut in oil markets has been created by surging output around the world.
In North America, U.S. shale oil output has soared, while oil producer club OPEC decided late last year to maintain its output despite slowing Asian and European economic growth and to defend its market share. Russian output has reached levels not since seen the end of the Soviet Union.
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