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Oil prices crept higher in Asia today but remained near multi-year lows ahead of a report on US crude inventories in a market weighed down by oversupply.
Analysts expect another build-up in US commercial crude stockpiles in the week ending December 4 when the data is released later in the day, adding to the supply glut.
OPEC decision
A decision by the OPEC oil producers group during their meeting last week not to slash the output levels continues to haunt the market, with the group deferring any further action to their next meeting in June.
US benchmark West Texas Intermediate crude for delivery in January was trading 58 cents higher at $ 38.09 and Brent crude for January delivery was up 48 cents at $40.74 at around 0250 GMT as dealers hunted for bargains after prices fell to their lowest in nearly seven years this week.
On Tuesday, Brent dropped briefly below $40 a barrel for the first time since February 2009.
“We believe that the current crude oversupply in the global market will persist over the coming years, reinforcing our flat outlook for oil prices over 2015-2017,” BMI Research said in a market commentary.
“This view was reinforced by the conclusion of the December 4 OPEC meeting in which the cartel chose to continue its policy of non-intervention in the market, postponing major decisions until the next scheduled meeting in June 2016.”
Members of the Organization of Petroleum Exporting Countries are currently producing an estimated 32 million barrels per day, above the group’s prior 30 million bpd target.
OPEC did not set a new production ceiling at Friday’s meeting in Vienna.
US crude inventories
Traders are also waiting for the US Department of Energy report on US commercial crude stockpiles to gauge demand in the world’s top oil consumer.
Next week’s meeting of the US central bank’s Federal Open Market Committee will determine the sentiment amid anticipation the Fed will raise US interest rates.
An interest rate hike would typically support the dollar, making dollar-priced oil more expensive for those holding weaker currencies. This would usually lead to lower demand and softer prices.
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