Oil turned higher in Asia Thursday in volatile trading as jittery investors awaited a US Federal Reserve interest rate decision later in the day.
Goldman Sachs recently reduced its crude oil forecasts, citing excessive global supply of oil and energy companies’ failure to reduce production.
On the New York Mercantile Exchange (NYMEX), a barrel of WTI crude for delivery bumped up $2.46 to $47.05 compared with Tuesday’s close.
The market was waiting for the US Department of Energy to publish its official figures later on Wednesday to gauge demand in the world’s top oil consuming nation.
The U.S. Federal Reserve may “leave a lot of negative uncertainty in emerging markets“, potentially affecting oil demand, if it doesn’t raise rates at its meeting this week, Currie said.
Higher United States interest rates would likely attract cash from money traders, lifting the dollar. EIA data shows USA crude and condensate production peaked at 9.612 million barrels per day (bpd) in April and had declined by 316,000 bpd by June.
Brent crude LCOc1 traded up 63 cents at $49.71 a barrel at 0944 GMT, after touching an intraday low of $48.60.
“With USA output shifts still very much under the microscope, today’s oil rig counts could be a key determinant as to how the complex finishes this week”, said Jim Ritterbusch, analyst at Ritterbusch & Associates, an oil markets advisory in North Wabash, Chicago.
The prospect of falling US oil production as prices skim six-year lows has narrowed the gap between benchmark USA and Brent crude futures. Iraq plans to increase exports of crude from its southern region by 26 percent next month, with a combined 81 cargoes of Basrah Light and Basrah Heavy grade crudes totaling 114 million barrels, according to a loading program obtained by Bloomberg News. That could be bearish for dollar-denominated oil as it would make fuel more expensive for importers who hold other currencies.
Front-month US crude futures have strengthened this week to their firmest versus Brent since the early days of the USA shale oil boom, knocking off 70 percent of their discount to the global benchmark to around $2 per barrel.