Oil market slips as US crude reserves rebound
Oil slid Wednesday on news of soaring crude inventories in the United States, and after major producers stressed they will maintain output levels despite global oversupply.
In late afternoon deals in London, Brent North Sea crude for February delivery lost 53 cents to $46.06 per barrel.
US benchmark West Texas Intermediate for delivery in February dropped just three cents at $45.85 a barrel.
The US Department of Energy revealed that commercial crude stocks surged 5.4 million barrels in the week to January 9.
That was far bigger than market expectations for a gain of 1.75 million barrels, according to analysts polled by Bloomberg News.
Rising inventories signal weak demand in the United States, which is the world's top crude consumer.
Gasoline or petrol reserves meanwhile rose 3.2 million barrels, easily outstripping predictions for a gain of 1.3 million.
"Crude inventories and gasoline inventories are strong while refinery demand dropped, which could signal the beginning of the seasonal slowdown during maintenance," noted Saxo Bank analyst Ole Hansen.
Oil sentiment also soured Wednesday after the World Bank slashed its global 2015 economic growth forecast to 3.0 percent from 3.4 percent, raising fresh doubts about future crude demand.
"Oil prices remain under pressure," said Commerzbank analyst Carsten Fritsch.
"The reason cited for this price weakness is the oversupply on the world market which is weighing on the Brent price."
Oil had dived Tuesday to close at a six-year low after OPEC officials underscored the cartel's resolve to not cut output despite a supply glut and plunging prices.
Brent had slumped as low as $45.19, the lowest point since March 2009.
The market languished close to that level on Wednesday.
"OPEC is likely to stick with current production levels at least until the next OPEC meeting in June," said Daniel Ang, analyst with Phillip Futures in Singapore.
Crude prices were already on the decline after peaking above $100 a barrel in June, but the fall accelerated in November when the 12-nation Organization of Petroleum Exporting Countries (OPEC) decided to maintain its collective output ceiling.
OPEC member United Arab Emirates on Tuesday urged the United States to cut its production of shale oil, which has been largely credited for the supply glut.
"We cannot continue to be protecting a certain price," UAE Energy Minister Suhail al-Mazrouei said.
"We have seen the oversupply, coming primarily fr om shale oil, and that needed to be corrected," he told participants in the Gulf Intelligence UAE Energy Forum in Abu Dhabi.
And Kuwaiti Oil Minister Ali al-Omair said: "We expect this situation to continue until the surplus on the market is absorbed and the world economy improves."
© 2015 AFP