Singapore: Oil rose towards $48 a barrel on Wednesday, recovering from a tumble of more than $100 off July peaks, but the upside could be limited, with further signs of weakening oil demand expected in upcoming weekly US oil data.
Prices have lost more than 13% since last week to stand at three-and-a-half-year lows, on a gloomy economic outlook and after Opec deferred a likely third supply cut to later in December, while showing imperfect compliance with the two cuts it has already agreed on.
US light crude for January delivery rose $1.05 to $48.01 a barrel by 7:45am (IST) having earlier risen as high as $48.05.
The contract settled down $2.32 at $46.96 on Tuesday, its lowest settlement since May 2005, after having broken through $47.27, $100 below its record high hit in July.
London Brent crude gained $1.06 to 46.50.
“At the moment, weakness in demand is the key thing affecting prices,” said David Moore, commodity strategist with the Commonwealth Bank of Australia.
US weekly stocks data, to be released at 9pm could show a 1.7 million barrel rise in crude stocks for the week ended Nov.28, the third consecutive week of increases, a Reuters poll of analysts found.
Distillate stocks were forecast to show a 300,000-barrel increase while gasoline supplies could be up 900,000 barrels, as demand probably fell, even with lower pump prices ahead of the Thanksgiving holiday week, some analysts said.
Recession worries could have kept many Americans closer to home than usual this Thanksgiving, according to travel group the American Automobile Association.
The US National Bureau of Economic Research said on Monday the current recession, in which the US has been plunged for a year, could be the worst since World War Two.
Adding further pressure on prices, supplies appear to be falling more slowly than expected.
Opec oil supply fell in November for a third consecutive month as members began to implement a deal to cut supplies in a move to halt the slide in oil prices, a Reuters survey showed on Tuesday.
But the survey suggested the Organization of the Petroleum Exporting Countries met only 66% of a pledge to lower output by 1.5 million barrels per day in November - so far not enough to counter the slump in oil demand as the world economy slows.
Opec members may decide to cut output further at their next policy-setting meeting in Algeria on 17 December after having opted to defer a third cut last weekend.