Oil bounces after big losses but glut persists
(Reuters) Oil prices rallied on Thursday from sharp losses, but brokers said the downtrend could resume soon as record-high stocks and worries over slowing economic growth dampened sentiment.
Brent crude oil was up $0.60 at $46.86 per barrel by 1015 GMT. US crude was up $0.60 at $45.35.
"The oil market is oversupplied, OPEC production is on the rise and we had a rather bearish weekly US oil stats report," said Tamas Varga at London brokerage PVM Oil Associates.
Crude stocks in the US fell less than expected last week, while distillate inventories rose the most since January and gasoline stocks unexpectedly increased, the Energy Information Administration (EIA) said on Wednesday.
A bearish assessment of the oil market by the International Energy Agency (IEA) on Wednesday also helped send both crude oil benchmarks down more than 4% by the close of trading.
The IEA said a glut in the global oil market was persistent and would put a lid on crude prices despite demand growth and declines in non-OPEC production.
"We know the process of rebalancing is taking place now, but there is still an overhang in oil and this will take time," said Avtar Sandu, senior commodities manager at Phillip Futures.
Surging crude stocks have pushed floating storage to seven-year highs, the IEA said.
The EIA report said crude inventories fell 2.5 MMbbl last week, less than a 3 MMbbl drop forecast in a Reuters poll.
The report portrayed a traditionally busy summer driving season beset with unusually low demand, when many had expected record driving trips amid lower oil prices. Weak gasoline is putting crude under pressure worldwide with Middle East grades in particular hit by low Asian demand.
Technical analysts say crude markets may be poised for a bigger move lower after three months of strength.
"The market moved up to $50 quite fast, so we might go down and see whether there is anything below $40," Sandu at Phillip Futures said.
Varga at PVM said a first target for Brent could be its 100-day moving average at $44.84 per barrel, a level that could be reached in the next week.
Reporting by Christopher Johnson; Additional reporting by Aaron Sheldrick; Editing by Dale Hudson and David Evans
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