LONDON – Crude oil prices slipped on Wednesday amid a persistent oversupply of physical oil, but stock market gains globally helped to stem the losses.
European shares rose in early trade, buoyed by an 8 percent jump in Japanese stocks and the prospect of more stimulus from Chinam soothing investors rattled by recent market turmoil.
Yet concerns remained over the combination of high global oil production and weakening demand growth, especially as growth in China slows.
Brent crude was trading at $48.92 a barrel at 1127 GMT, down 60 cents from the previous evening’s close, after climbing 4 percent in the previous session.
U.S. West Texas Intermediate crude was trading 70 cents lower at $45.24, having falling in the previous session as the end of the U.S. summer driving season pointed to lower fuel consumption.
Tamas Varga, of oil brokerage PVM, said that strong stock performance had kept prices from falling further, but that support is likely to be temporary.
“The oil market is still oversupplied,” Varga added.
Oil prices have fallen by more than 50 percent since June 2014 because of the global supply glut, though prices have see-sawed in recent weeks on concerns about Chinese growth and a slide in its equity markets.
Analysts said the relatively stable trading prices on Wednesday came as the market awaited more fundamental data, such as the monthly short-term energy outlook due from the U.S. Energy Information Administration later in the day.
“We’ve seen a little bit of a temporary quietness afer the wild swings of last week,” said Richard Mallinson, analyst at Energy Aspects. “People are trying to get a clear picture of the signals.”
While crude oil production in Saudi Arabia dipped by 100,000 barrels per day (bpd) in August, the Organization of the Petroleum Exporting Countries (OPEC) was still producing close to record volumes to squeeze out competition, especially from U.S. shale producers.
There was also news that Russia and Mexico would not cut production, cooling speculation that some producers might lower output to support prices.
On Wednesday Britain’s oil and gas industry association said that the country’s output in 2015 would rise for the first time in 15 years, reflecting investment in more efficient technology.
(Additional reporting by Henning Gloystein in Singapore; Editing by Jason Neely and David Goodman)
This article was from Reuters and was legally licensed through the NewsCred publisher network.