SINGAPORE – Brent crude rose above $54 a barrel on Tuesday, recovering some of the previous session’s losses when it dropped to a six-week low, although concerns over a worsening global supply glut kept a lid on gains.
U.S. crude, or West Texas Intermediate (WTI), stretched its drop into a sixth session and hovered just above a six-year low, keeping its discount to Brent prices close to $10, a trend that analysts say could deepen.
“We expect WTI to remain under pressure as inventories swell further as the seasonal maintenance period begins. We expect this to remain the case in the short term,” ANZ analysts said in a note on Tuesday.
May Brent crude <LCOc1> rose 20 cents to $54.14 a barrel as of 0300 GMT. The April contract, which expired in the previous session, closed down $1.23 after hitting $52.50 earlier in the day, its lowest since Feb. 2.
U.S. crude <CLc1> fell 6 cents to $43.82 a barrel, after settling down 96 cents a day ago when it tumbled to $42.85, its lowest since March 2009.
The spread <CL-LCO1=R> between the two benchmarks had widened to $10.15 on Monday.
“There is a lot of trade on it. Traders would be quite happy to see the spread go out to $15-20,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.
“We have reached a real bifocal point for the market. We either enter a more bearish mood with a new low or it turns around and becomes a bit bullish,” he said.
Traders are now waiting for data on U.S. crude inventories for price direction. A Reuters poll showed a likely build in stocks for a tenth week to a new record high.
The poll was released ahead of weekly reports from industry group the American Petroleum Institute (API) and from the U.S. Department of Energy’s Energy Information Administration.
Worries that a nuclear deal could end sanctions against Iran, allowing Tehran to send more of its oil into the market, also dragged on oil markets.
The United States and Iran inched toward a landmark nuclear agreement that would result in the removal of sanctions against Tehran, although differences remained.
Iran has said it will boost oil exports once the sanctions are lifted.
(Editing by Himani Sarkar)
This article was written by Keith Wallis from Reuters and was legally licensed through the NewsCred publisher network.