LONDON – Crude oil prices fell on Wednesday after industry data showed an increase in U.S. stockpiles, and as analysts said U.S. output had been surprisingly resilient in the face of lower prices.
Brent crude futures <LCOc1> were down 34 cents at $47.10 a barrel by 1446 GMT (09:46 a.m. ET), though they recovered from a low of $47.00 set earlier in the session, supported by a weaker dollar.
A lower dollar supports oil, priced in the U.S. currency, as it makes it more affordable for holders of different currencies.
Benchmark U.S. crude futures <CLc1> slipped to a two-week low at $43.55 a barrel in early trading before recovering to trade down 43 cents at $43.78 a barrel
U.S. crude stocks jumped by 6.3 million barrels in the week to Nov. 6 to 486.1 million barrels, data from industry group the American Petroleum Institute showed late on Tuesday, compared with analyst expectations for an increase of 1 million barrels.
OPEC member Ecuador’s oil minister said at an Arab-South American summit in Riyadh on Wednesday the only way to balance the market was to cut production and it aimed to reach an agreement on that at the group’s December meeting.
At the same meeting, Saudi Oil Minister Ali al-Naimi discussed markets with his Venezuelan counterpart Eulogio del Pino, he told Reuters.
Venezuelan President Nicolas Maduro pressed his desire to convene a meeting of world oil producers to revive sub-$50 a barrel oil prices that have walloped his economy.
Traders and investors were looking ahead to data from the U.S. Energy Information Administration on Thursday, delayed by a day due to a holiday. A Reuters survey showed stockpiles likely rose for the seventh consecutive week.
“You’re seeing more of a plateau in U.S. production rather than a decline, I’ve been expecting a decline in 2016 but I think the market is in a mode of show us rather than tell us and they’re just not seeing the numbers,” said Michael Hsueh, analyst at Deutsche Bank.
“It’s still looking quite difficult for those that are hoping for or expecting a recovery in prices.”
Hsueh said Deutsche Bank expects global oversupply of around 1 million barrels per day in the first half of 2016.
On the demand side, confidence among Japanese manufacturers fell in November for a third straight month to levels not seen in more than two years, a Reuters poll showed on Wednesday, reflecting fears a China-led slowdown in overseas demand may have pushed Asia’s second-biggest economy into recession.
“The weakness of global manufacturing activity is … putting pressure on energy demand,” JBC Energy analysts said, adding they expected a significant drop in oil demand growth in 2016.
(Additional reporting by Henning Gloystein in Singapore; Editing by William Hardy and Mark Potter)
This article was written by Sarah McFarlane and Simon Falush from Reuters and was legally licensed through the NewsCred publisher network.