Oil edged further above $46 a barrel on Tuesday, supported by the prospect of lower US inventories and production although concern about weaker Asian demand kept prices in check.
While analysts expect reports this week to show no change in US crude stocks overall, an estimate from market intelligence company Genscape that they fell by 1.8 million barrels at Cushing – U.S. crude’s delivery point – lent oil some support.
Brent crude was up 6 cents at $46.43 a barrel, after declining in the previous two sessions. US crude had risen 30 cents to $44.30 by 1013 GMT.
“Genscape is forecasting a large stock draw in Cushing,” said Olivier Jakob, analyst at Petromatrix. “The supply and demand numbers suggest that the low oil prices are starting to have an impact on U.S. crude oil production growth.”
In their latest reports, the International Energy Agency and the OPEC cut forecasts for non-OPEC and US oil supply, potentially easing a supply glut next year.
Even so, Brent has fallen from above $63 since the start of July due to persistent oversupply and concern about Chinese and other Asian demand. Oil fell on Monday after growth in China’s investment and factory output missed forecasts in August.
In focus later on Tuesday will be the latest weekly report from industry group the American Petroleum Institute due at 2030 GMT. The U.S. government’s Energy Information Administration issues its inventory report on Wednesday.
OPEC has refused to lower output to support prices without the participation of non-OPEC countries such as Russia, despite the efforts of members including Venezuela, which on Monday urged the group to convene a heads of state meeting.
But Russia has refused to cut its output and top OPEC producer Saudi Arabia sees no need to hold a summit if such a meeting would fail to produce concrete action towards defending prices, sources said last week.
Despite the weak immediate outlook, some analysts are seeing early signs of a rebalancing market.
“The market remains oversupplied, but the pace of stock builds is moderating,” Energy Aspects said in a report. “The Asian demand outlook is not rosy but it is not collapsing either.”