Oil market ekes out gains

[LONDON] World oil prices rose slightly on Tuesday, snapping four sessions of straight losses, as traders digested a mixed outlook from the International Energy Agency.

Traders were also positioning themselves on the eve of the weekly snapshot of oil inventories in top consumer the United States, amid expectations of a sharp slowdown in rising crude reserves.

In late afternoon deals in London, Brent North Sea crude for delivery in December added 27 cents to US$47.46 per barrel.

US benchmark West Texas Intermediate (WTI) for December won 59 cents to US$44.46 a barrel compared with Monday's close.

Earlier on Tuesday, crude futures had fallen on long-running worries about a supply glut and the weak global economic outlook.

"Both Brent and WTI contracts have bounced off their bullish trends... ahead of the US stockpiles reports this week," said analyst Fawad Razaqzada at trading firm Gain Capital.

"After a five-day sell-off, I wouldn't be surprised if oil finds a base at these levels, although at this stage it is too early to say whether the bounce will materialise into a rally," he told AFP.

Meanwhile, the Paris-based IEA watchdog forecast on Tuesday that the global oil market should gradually recover to US$80 by 2020.

Prices have collapsed by more than half since mid-2014 and currently languish under US$50, hurt by a stubborn global supply glut and Opec's decision to maintain output to counter booming US shale production.

The market also plunged owing to a weak demand and a slowdown in China's economic growth.

"The process of adjustment in the oil market is rarely a smooth one, but, in our central scenario, the market rebalances at $80 per barrel in 2020, with further increases in price thereafter," the IEA said in its latest World Energy Outlook published on Tuesday.

Mr Razaqzada added that trading sentiment was downbeat as a result of the gloomy prediction.

"The sentiment continues to remain bearish on the oil market, with the IEA today suggesting in its closely-watched annual outlook that the price of oil will only recover to US$80 a barrel no sooner than 2020," he said.

"But like many other forecasters it expects non-Opec supply to fall sharply next year as oil companies continue to cancel or postpone exploration and other projects. So it was a mixed report." The market had fallen on Monday also as traders weighed global growth forecasts and weak Chinese crude imports against abundant supplies.

A weekend report from China, the world's second biggest economy and number-one energy user, showed exports and imports - particularly of crude - tumbled last month.

And on Tuesday fresh figures showed inflation in the country slowed further in October, compounding fears about the nation's economic outlook.

Adding to the selling pressure was news the Organisation for Economic Development and Cooperation (OECD) had cut its growth outlook for the world economy for this year and next.

The OECD trimmed its forecast for global growth this year slightly to 2.9 per cent, but slashed the 2016 estimate 0.3 percentage points to 3.3 per cent, citing stagnating trade largely due to a slowdown in China.

AFP