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[SINGAPORE] Oil prices fell on Wednesday as renewed concerns over global demand and high stock levels halted a rally that pushed up prices by about 19 per cent over the past four sessions.
The recent rebound was driven by hopes that prices may have hit a bottom after a seven-month rout slashed oil futures by nearly 60 per cent and prompted major energy firms to cut spending on new production. But weak data from key consumer China has rekindled demand concerns, dragging on oil prices. "A steady stream of news regarding falling capital expenditure from the industry and a drop in US oil rigs in operation appears to be the spark," ANZ analysts said. "While sentiment appears to have shifted, volatility will remain high." Brent crude was 50 cents lower at US$57.41 a barrel by 0336 GMT, after gaining almost 6 per cent on Tuesday and off a near six-year low of US$45.19 reached in mid-January.
US crude was down 95 cents at US$52.10 a barrel. The contract settled up 7 per cent in the previous session, after trading at as high as US$54.24 earlier in the day - more than US$10 above than a near six-year low of US$43.58 reached last week.
Estimates by industry group American Petroleum Institute that US crude stockpiles rose more than 6 million barrels last week also helped drive prices lower on Wednesday.
Oil major BP and top Chinese offshore energy producer CNOOC Ltd said on Tuesday they would deepen capital investment cuts this year to adapt to lower oil prices.
The outlook for oil demand has also been muddied by recent data showing China's services sector grew at the slowest pace in six months in January.
However, some say lower oil prices will spur economic growth, which will boost demand for commodities including oil. "Low oil prices and cheap money will lead to stronger global economic growth and much stronger oil demand than conventional wisdom would suggest," PIRA Energy said in an email.
It forecasts global oil demand to grow by 1.5 million barrels per day in 2015, but warns the current supply surplus will overwhelm demand for the next six months.
A US refinery strike at nine plants with about 10 per cent of the country's refining capacity was set to go into its fourth day, after Royal Dutch Shell Plc failed to agree with union leaders over a new wage contract for refinery workers.