Brent oil futures rose above US$49 (RM177.87) a barrel today as speculator buying on hopes for a price rebound offset data showing record-high US crude stocks.
At 1438 GMT (10.38pm Malaysian time), US crude was trading at US$44.64 a barrel, up 19 cents off a six-year low hit on Wednesday. Brent was up 53 cents at US$49 a barrel.
Both futures contracts were boosted by encouraging US initial jobless claims data, which has dipped to the lowest level in nearly 15 years. This cemented investor views that the US economic recovery was gathering strength and demand for oil products would rise.
The numbers offset Wednesday's bearish supply data from the US Energy Information Administration (EIA) showing that domestic crude stocks had risen by almost 9 million barrels week-on-week to nearly 407 million, the highest level since the government began keeping such records in 1982.
That pushed US crude to an intraday low of US$44.08, the weakest since April 2009, but Brent held up relatively well.
"It's a tug of war between the non-supportive fundamentals and investor flows – investors are more concerned about missing a potential bounce," said Ole Hansen, senior commodity strategist at Saxo Bank. "But there is nothing bullish to be found in those inventory numbers."
Analysts expect stockpiles to keep building as US production has shown no sign of slowing, and when refiners enter seasonal turnarounds, utilisation rates will fall.
In addition, the market structure gives traders an incentive to buy cheap crude for storage, with the aim of selling it at a higher price for future delivery.
Some traders believe such buying to store has provided a "false bottom" in the market, and that when land storage becomes filled, or floating-storage economics no longer work, there will be another selloff in futures.
"Traders buying and putting oil into storage may be holding the price for now," said Christopher Bellew, a broker at Jefferies Bache in London. "I see the market as being in a consolidating phase ... (but) at some point I expect a move to the downside."
He suggested Brent could test US$40 or lower. "My principal reason for being so bearish is the production war within Opec as Saudi and Iraq both seek to maximise sales and US production has not yet started to slow."
In an earnings call, Shell's Chief Executive Ben van Beurden said oil markets would remain volatile in the medium term given that the fall in prices of over 50% in the last six months was caused by a relatively small oversupply, amounting to only 2% of global demand. – Reuters, January 29, 2015.