Oil prices have steadied, boosted by a rebound in US equities, after earlier losses on fears about surging US crude production and a weakening global economy.
Brent crude oil futures were down 14 cents to $US61.19 a barrel. US crude futures fell 32 cents to $US52 a barrel. Earlier in the session, both benchmarks dropped about two per cent.
The Organization of the Petroleum Exporting Countries in its monthly market report cut its forecast for the average demand for its crude in 2019 to 30.83 million barrels per day, down 910,000 bpd from the 2018 average.
OPEC, however, said it cut oil output sharply in December before a new accord to limit supply took effect, suggesting that producers have made a strong start to averting a glut in 2019 as a slowing economy curbs demand
Saudi Arabia led the cuts of 751,000 bpd in December, the biggest month-on-month drop in almost two years.
The group and its allies plan to meet on April 17-18 in Vienna to review the supply reduction deal that began in January.
Even as the OPEC-led cuts reduce supplies, US output surged close to 12 million bpd last week, and some traders and investors are concerned that growth in global supply this year will outpace demand.
“That’s going to weigh on the market at least until we get some new information,” including from OPEC, said Thomas Saal, senior vice president of INTL Hencorp Futures in Miami.
Still, Saal said, investors had already expected increasing US production and priced it into the market, which supported prices on Thursday.
US crude output has climbed by 2.4 million bpd since January 2018 and stockpiles of crude and refined products have risen sharply, US Energy Information Administration data showed.
Wall Street’s main indexes were slightly higher, helping to steady oil futures, which sometimes track equities.
“Today and tomorrow we’re probably going to move in concert with equities,” Jim Ritterbusch, president of Jim Ritterbusch & Associates in Galena, Illinois.
“Going forward, we should start getting a little better indication of Saudi production trends. I think that’s going to be supportive to the market,” Ritterbusch said.
In response to the drop in price in the second half of last year, OPEC and non-members plan to cut production by a joint 1.2 million bpd this year.
Oil is still about 20 per cent above the lows reached in late December, but analysts said Brent has been trading in the low $US60s and US crude in the low $US50s due to ongoing nervousness about relations between Washington and Beijing and China’s economic outlook.
“Brent needs to move past $US62 before we can talk about $65,” BNP Paribas head of commodities Harry Tchilingurian told the Reuters Global Oil Forum.
“From there, the door will be open to target $US70, (if) we do not have negative news emerging around US-China trade talks that caused high levels of angst and de-risking last December.”