LONDON: Oil prices fell on Thursday, under pressure from rising supplies both in the United States, where inventories gained for a sixth straight week, and in Europe, where physical crude prices are nearing five-month lows.
On Wednesday, oil dropped nearly 4 percent after the Energy Information Administration said U.S. crude inventories added 2.85 million barrels last week, in line with forecasts, despite a fall in imports to their lowest level since 1991.
Brent crude futures were down 23 cents at $ 48.35 a barrel by 1535 GMT, some 4 percent below four-week highs above $ 50 hit two days earlier.
U.S. WTI crude futures fell 55 cents to $ 45.77 a barrel, having lost 3 percent the day before.
“The difficulty right now for the market is being able to lift off from the current floor that it has found in the mid-$ 40s on a WTI basis,” BNP Paribas’ global head of commodity strategy Harry Tchilinguirian said.
“For that to happen, the market needs to see, at least directionally, some form of improvement, whether that translates into significantly lower production in the U.S. or at least much stronger refinery runs,” he said.
The discount in the price of oil for immediate delivery relative to that for delivery in a year, or contango, neared its largest in nearly two months this week, touching $ 7 a barrel.
This gap in price can often reflect the perception that near-term demand is falling short of supply.
Ample supply of North Sea crude, which underpins the benchmark futures price, has pushed physical prices to their lowest since June.
“The contango in Brent futures could widen more than the current levels … just looking at the weight of the physical market,” Petromatrix analyst Olivier Jakob said.
Contributing to the generally bearish sentiment was an internal OPEC document seen by Reuters that showed weaker demand in the next few years for oil from the group.
OPEC oil ministers will meet on Dec. 4 to decide whether to extend their year-old strategy of allowing prices to fall to slow higher-cost rival supply.
OPEC, along with Russia, is unlikely to change tack, BMI Research said in a note on Thursday.
“Our view remains that OPEC and Russia will continue on their strategy of producing as much oil as possible to squeeze out higher-cost producers,” BMI said.