Oil prices have stabilised after posting losses in previous sessions, but investors remained cautious over oversupply concerns and a negative global economic outlook.
Front-month Brent crude oil futures gained five cents to reach $66.17 a barrel, while US West Texas Intermediate (WTI) crude futures rose four cents to $56.29 a barrel, Reuters reported.
Traders stated that Brent and WTI contracts rebounded amid signs that China and the US may initiate measures to ease the prevailing trade dispute.
Oil prices have gone on a downward trend since hitting four-year highs early October due to rising supply and unease over slowing oil demand triggered by a potential economic downturn.
Mercatus Energy Advisors president Mike Corley was quoted by the news agency as saying: “Asian refiners and consumers we speak with are mentioning initial concerns of slowing demand.”
In a note, Morgan Stanley stated that China’s economic ‘conditions deteriorated materially’ in the third quarter of this year.
Adding to the glum, Capital Economics analysts opined that China’s ‘near-term economic outlook still remains downbeat’.
China is the world’s biggest oil importer and the signs of slowing economy are a cause for concern.
The situation is not any better in Japan and Germany. Data shows a slowdown in economic activity in these industrial powerhouses in the third quarter.
Rising crude production from the US is also adding to the pressure on crude prices. US output rose 22% this year to a record 11.6 million barrels per day (Mbpd).
Corley added: “Producers have more barrels than they can sell at the moment.”
Oil inventories are rising due to the increased production.
According to the American Petroleum Institute, crude stockpiles soared 8.8 million barrels last week to 440.7 million.
Bernstein Energy analysts said: “With inventories likely to build in Q1 2019, prices could remain under pressure in the near term.”
The producer cartel Organization of the Petroleum Exporting Countries (OPEC) is discussing supply cuts to prevent a reoccurrence of the situation witnessed in 2014 when prices dropped due to a supply glut.