By Henning Gloystein

SINGAPORE (Reuters) – Crude prices fell on Thursday as strong gasoline demand and lower U.S. crude output failed to counter downward pressure from global overproduction that has left storage facilities swelling with unsold oil.

The international Brent crude benchmark was trading at $34.18 per barrel at 0643 GMT, down 23 cents from its last close, hit by global oversupply that sees 1 million to 2 million barrels of crude produced every day above demand.

U.S. West Texas Intermediate (WTI) crude futures were down 23 cents to $31.92 per barrel.

“The basic overriding position in the oil market at the moment is that the global production exceeds global demand by quite a wide margin,” Said Ric Spooner, chief market analyst at CMC Markets.

In a sign of the excess supply, U.S. crude stockpiles rose 3.5 million barrels last week to reach an all-time peak above 507 million barrels, weighing on crude futures, data from the Department of Energy showed on Wednesday.

A slowing global economy may also increase the likelihood of low prices. Citi said global growth would be just 2.5 percent this year compared to a previous forecast of 2.7 percent.

“Global growth prospects are worsening further, with deterioration across advanced economies alongside previous weakness in emerging markets,” Citi economists wrote in a research note.

Despite the falls, there were some supportive indicators that briefly pushed oil prices on Thursday.

“It may be a little early to call it a trend but we are beginning to see some sign of cuts,” Spooner said, adding that U.S. output had fallen to about 9.1 million barrels per day, the same level as in October 2015.

“If we do start to see that (production) fall gradually from here that… might bring a bit of stability to the market,” he said.

Strong U.S. demand for gasoline supported crude on Wednesday, although analysts said this effect would ease.

U.S. gasoline demand stood at 9.06 million barrels per day (bpd) during the week ending Feb. 19 compared with 8.6 million bpd in the week ending Jan. 22, the Energy Department said.

“In 2015 we saw, 0.4 million barrels per day of demand growth from gasoline because the fall in oil prices is passed on to the consumer. This year, we’ve got growth normalizing to less than 0.1 million barrels per day,” said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.

(Additional reporting by Manesha Pereira; Editing by Joseph Radford and Christian Schmollinger)

The post Oil slips as oversupply, slowing growth outweigh U.S. output drop appeared first on Ubiq TV | English News Channel.

By Keith Wallis

SINGAPORE (Reuters) – Crude futures rose in Asian trade on Thursday after Iran welcomed plans by Russia and Saudi Arabia to cap production, although analysts said the move would not lead to any output cuts and Tehran offered no action of its own.

After oil prices rose in the previous session as much 8 percent, commentators suggested markets had overreacted to Iran’s support for the caps and said the Russian-Saudi move would not likely reduce the global surplus.

“I share the consensus view that producers are unlikely to reach an agreement (on cuts), the rationale being the need to satisfy two conditions,” said Ric Spooner, chief market analyst with Sydney’s CMC Markets.

“First, any price gains must offset losses achieved from volume cuts – production cuts must be meaningful – sufficiently large to achieve a substantial price increase. And they will have to involve everybody – all the major (producer) players. That will be difficult to achieve,” he said.

Brent futures <LCOc1> rose 42 cents to $34.92 a barrel by 0555 GMT, having closed 7.2 percent higher in the previous session after hitting an intraday high of $34.99.

U.S. crude <CLc1> gained 50 cents to $31.16 a barrel, having finished 5.6 percent higher in the previous session after touching a high of $31.49.

Oil prices would likely remain volatile, Spooner said, as traders and investors reacted to news and rumours about curbs on output growth and possible cuts in production.

Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar on Wednesday but did not say if Iran would cap its output in keeping with the move by Russia, Saudi Arabia and Iraq.

“The agreement will do little to reduce the current supply glut,” BMI Research said in a note on Thursday.

A rebalancing in supply and demand is more likely in the second half of 2016, BMI said.

Iran’s OPEC envoy Mehdi Asali said it was “illogical” to ask Iran to freeze production levels in comments to the Shargh daily newspaper before the talks on Wednesday.

Iran exported around 2.5 million barrels per day (bpd) of crude before 2012, but sanctions, imposed by world powers to curb Tehran’s nuclear programme, cut its oil shipments to about 1.1 million bpd.

The sanctions were lifted last month, allowing Iran to resume selling oil freely in international markets.

Oil prices also gained support after U.S. crude stocks unexpectedly fell by 3.3 million barrels last week to 499.1 million, data from the American Petroleum Institute showed on Wednesday.

“We continue to eye crude production and would think that it should start to decrease. Should this happen, we would think that this could be the start of U.S. production cuts due to low oil prices,” Singapore’s Phillip Futures said in a note.

Analysts had expected crude inventories to climb by 3.9 million barrels in the week to Feb. 12, according to a Reuters poll on Tuesday.

Oil prices may gain further direction when the Department of Energy’s Energy Information Administration releases official oil inventory data later on Thursday.

(Reporting by Keith Wallis; Editing by Tom Hogue and Gopakumar Warrier)

The post Oil prices climb as Iran endorses oil output cap appeared first on Ubiq TV | English News Channel.