Oil Steady Ahead of U.S. Data

Oil prices steadied on Wednesday ahead of U.S. oil data expected to show falling crude and gasoline stockpiles, raising hopes of increased demand for crude.

Prices consolidated after a six-week rout driven by global oversupply and concerns about falling demand in Asian economies and the United States.

U.S. government data on crude stockpiles is due at 10:30 a.m. EST (1430 GMT) on Wednesday. A Reuters poll estimated on average that commercial U.S. crude stocks fell by just under 800,000 barrels in the week to Aug. 14.

The American Petroleum Institute reported on Tuesday that U.S. crude stocks had fallen by an even greater margin - by 2.3 million barrels in the week ended Aug. 14.

U.S. crude oil futures, also known as West Texas Intermediate (WTI), were down 25 cents at $42.37 a barrel by 1140 GMT. The front-month, September, U.S. crude oil contract is due to expire on Thursday. North Sea Brent crude was up 5 cents at $48.86 a barrel.

U.S. oil production is at record levels and producer costs appear to be declining, with no output scale-back anticipated.

Bearish sentiment was exacerbated last week when repairs at a large refinery in Whiting, Indiana caused a large stock build at Cushing, Oklahoma, the delivery point for U.S. crude futures.

Oil has lost about a third of its value since June and prices have been hovering just above six-year lows for the past week. The downward trend has been driven by global oversupply and record stockpile levels, analysts say.

"The recent drop in the price of oil confirms ... the global commitment producers have to their current levels of (high) output," said Scott Cockerham, managing director Houston-based Conway MacKenzie's Energy Advisory Services.

Many analysts said they expect some temporary price stabilisation as people take profits from short positions. But they said the downward price trend was likely to continue unless there was a significant reduction in global supply.

"I think the market has pushed too low and too fast," ABN Amro energy economist Hans van Cleef said. He added that, although he could see oil prices rebounding in the coming weeks, he thought they would remain low into next year.

ANZ bank said: "Any recovery in WTI prices from a six-year low may be short-lived with the U.S. entering the slow demand period in September."
 

By Lisa Barrington and Henning Gloystein