Oil prices edged up early on Wednesday, supported by a weaker dollar, but U.S. crude futures remained below $40 per barrel and Brent was below $42 as ongoing fuel oversupply and stuttering economic growth weighed on markets.
U.S. West Texas Intermediate (WTI) crude futures were trading at $39.63 per barrel at 0027 GMT, up 12 cents from their last settlement but still below the $40 marker it settled below for the first time since April during the previous session.
International Brent crude futures were trading at $41.85 per barrel, up a mere 5 cents from their last close, and failing to retake and maintain $42.
Analysts said a weaker U.S. dollar, which has shed 2.5 percent in value against a basket of other leading currencies since July highs, was lending oil markets some support by making fuel imports cheaper for countries using other currencies, potentially stoking demand.
“Risks for oil remain skewed to the downside in 2H16. Supply disruptions and risk appetite were supportive Apr-Jun, but fundamental headwinds are growing, which outnumber any recent positives,” said Adam Longson of Morgan Stanley in an outlook to clients.
The U.S. bank said the global economic outlook was also weak, potentially hitting fuel demand. “We expect global growth to move below consensus estimates,” Morgan Stanley said.
Oil markets have been dogged by oversupply that started in the crude sector more than two years ago and which has since spread to refined products, leaving storage tanks filled to the brink, and unsold fuel stored on ships.