Oil slipped to around $76 a barrel on Wednesday, paring losses after hitting its lowest since late August, pressured by concern that demand is weakening and supply ample even as U.S. sanctions loom on oil exporter, Iran.
In a sign supply is plentiful, industry group the American Petroleum Institute said on Tuesday, U.S. crude stocks had risen by 9.9 million barrels – more than forecast. The U.S. government’s supply report is due at 1430 GMT.
Brent crude, the global benchmark, was down 37 cents to $76.07 a barrel at 1020 GMT. It fell earlier in the day to $75.11, the lowest since Aug. 24. U.S. crude was unchanged at $66.43.
“Rising oil inventories and growing petro-nations’ output calm the supply fears related to the Iran oil embargo,” said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer.
Crude fell sharply in the previous session, with Brent closing down 4.3 per cent.
“This price movement comes as little surprise with attention now clearly being focused on the weakening economic situation and gloomy demand outlook,” analysts at JBC Energy said in a report.
A sell-off in equities due to concern about the economic outlook also weighed on crude on Tuesday.
Forecasters such as the International Energy Agency already expect slower oil-demand growth for 2019 due to a slowing economy.
On Wednesday, Asian stocks edged up as signs of stimulus from China propped up sentiment and European shares attempted a tentative rebound.
While U.S. sanctions on Iran, which start on Nov. 4, are expected to tighten supplies, other producers, notably top exporter, Saudi Arabia, are already pumping more oil and willing to increase further if needed.
Saudi Energy Minister Khalid al-Falih said on Tuesday that Saudi Arabia would step up to “meet any demand that materializes to ensure customers are satisfied”.
Some analysts say nonetheless that prices could rebound before the end of the year.
“We still see Brent reaching $85 per barrel by year-end,” said U.S. bank Morgan Stanley.
Next year, slower demand and additional U.S. shale oil production should contribute to lower prices, Ruecker of Julius Baer added.
“While in the near term prices are at risk from any further supply disruption, oil should trend lower heading into 2019 as slowing emerging market demand growth and the shale boom restore the oil market’s supply cushion,” he said.