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Oil edges up toward US$65, traders see more downside
[LONDON] Oil edged higher on Thursday towards US$65 a barrel helped by a weaker US dollar, although prices remained close to a five-year low on signs that already ample supply will be even more plentiful in 2015.
Crude prices sank on Wednesday as Opec forecast an increasing supply surplus in 2015, US crude inventories unexpectedly rose and Opec's most influential voice, Saudi Arabia's oil minister, shrugged off the need for an output cut.
North Sea Brent crude rose 63 cents to US$64.87 by 1112 GMT, up from Wednesday's low of US$63.56 - the weakest since July 2009. US crude, which also hit a five-year low on Wednesday, rose 48 cents to US$61.42.
"Brent could be seeing a bit of short-covering and it could have quite a sharp rally after yesterday, but the market would still look just as bearish," said Christopher Bellew, a senior oil broker at Jefferies in London.
"It would be unwise to say the market has marked the bottom."
Brent has fallen more than 40 per cent, or US$50, from its 2014 high reached in June. Commerzbank, which cut its 2015 Brent price forecast to US$73 a barrel from US$82, also said it is too early to see an end to the losing streak.
"We may see some technical bounces, but it is too soon to speak of a sustainable price recovery," said Carsten Fritsch, analyst at the bank.
A slightly weaker dollar gave sentiment a boost in commodity markets. A weak dollar makes oil and other dollar-denominated commodities cheaper for holders of other currencies.
Opec said on Wednesday demand for its crude in 2015 would fall to its lowest in more than a decade, indicating a large supply surplus in 2015 without Opec output cuts or a slowdown in the US shale boom.
The prospect of any Opec cut remained slim as Ali al-Naimi, the Saudi oil minister, on Wednesday questioned the need for one, sticking to his stance outlined at Opec's meeting on Nov 27 despite a US$13 drop in prices since then.
At the meeting, Saudi Arabia and its Gulf allies urged fellow Opec members to combat the growth in US shale, which needs relatively high prices to be economic and has been eroding Opec's market share, by resisting output curbs.