Oil prices steadied on Thursday after hitting a near five-month low in the previous session but sentiment remained weak due to rising US supply and a stalling global economy.
On Wednesday, Brent and WTI hit their lowest levels since mid-January at $59.45 and $50.60, respectively, after USA crude production hit a new record high and stockpiles hit their highest since July 2017.
The rise in US stockpiles and fresh leg lower for crude prices comes as OPEC and its oil market allies are preparing to meet to decide production policy in the coming weeks.
Brent crude futures rose $1.04, or 1.7%, to $61.67/Bbl Thursday.
A day earlier, the American Petroleum Institute (API) estimated inventories had gone up by 3.545 million barrels last week, with gasoline inventories also swelling. Last night it was trading down about 1.8 per cent at $60.85 a barrel.
WTI kept the composure today after Saudi Energy Minister said the oil cartel has already agreed on an extension of the ongoing deal to curb the oil production, although he talked down the likeliness of deeper cuts.
But investors are still anxious about trade tensions that could stall the global economy, including the dispute between the United States and China.
Front-month Brent crude futures, the worldwide benchmark for oil prices, were at $60.50 at 0108 GMT.
With oil demand still holding steady, prices have been upheld until now.
The irony of the stock and crude increases is that Trump's comments on Thursday weren't all that upbeat: while it was rumoured he may delay action against Mexico, he also said he would likely decide on more China tariffs at the end of June, following his overnight threat to put tariffs on "at least" another $300 billion worth of Chinese goods. The two sides will discuss its policy at a highly anticipated meeting later this month or in early July.
Underlining concerns about oversupply, the head of oil giant Rosneft Igor Sechin said on Tuesday that Russian Federation should pump at will and that he would seek compensation from the government if cuts were extended.
"Demand is weakening much more rapidly than we had expected", Morgan Stanley analysts said in a note on Wednesday.
Though demand for oil is still up on a global level, economic concerns are also growing.
However, the investment bank noted that "We now estimate 2019 to be a year in which supply and demand broadly balance". Further, the sanctions imposed on Venezuela and Iran is offering some support.
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