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Volatile oil dips as high US stocks underline global oversupply
[SINGAPORE] Crude oil dipped in early Asian trade on Thursday after a volatile session the previous day, when prices rebounded sharply from near-six-year lows that reflected a global oversupply.
Wednesday's 4.5 per cent surge in Brent crude futures , the biggest percentage gain since June 2012, came as traders covered themselves on expiring options.
However, the tone remains bearish because of the supply glut and on Thursday Brent had fallen back 56 cents to US$48.13 a barrel by 0323 GMT. On Tuesday it hit US$45.19, the lowest since March 2009.
US crude was trading at US$48.14 a barrel, down 34 cents.
Stocks data from the US Energy Information Administration added to the worries over excess supply. "EIA data showed US crude stockpiles rose to 5.4 million barrels in the last week, far more than analysts' expectations, pointing to continued oversupply in the market," ANZ bank said in a morning trading note.
The bank said in a separate note on Thursday that it saw a 60 per cent chance Brent would range between US$40 and $60 a barrel in the first half of the year, a 35 per cent possibility of prices falling to US$35-45 during that time and only a small chance of prices going up to US$60-80 a barrel. "A war for output market share means oil prices are skewed to the downside. Funds are unwinding a large positive investment premium, but further selling is possible," ANZ said.
The glut in oil markets has been created by surging output around the world.
In North America, US shale oil output has soared, while oil producer club Opec decided late last year to maintain its output despite slowing Asian and European economic growth and to defend its market share. Russian output has reached levels not since seen the end of the Soviet Union.