Oil rebounded in Asia today on bargain hunting following a sharp fall the day before as lingering concerns about the global crude supply glut continued to keep a lid on gains.
US benchmark West Texas Intermediate (WTI) for November delivery rose 0.70 per cent to USD 47.43 and Brent crude for November gained 0.88 per cent to USD 50.30 in late-morning trade.
Both contracts fell sharply yesterday after rising nine percent last week, with WTI tumbling around five per cent.
WTI and Brent have bounced back since hitting six-year lows in late August, with last week seeing healthy rallies in line with global equities on waning expectations the US Federal Reserve will hike borrowing costs this year, pushing the dollar lower.
But analysts say any rally is unlikely to be sustained as the market remains oversupplied and the forecasts for slower global economic growth this year and next do not augur well for oil demand.
WTI failed to sustain gains after breaking through the psychological threshold of USD 50 a barrel for the first time since July.
“Given the array of structural negatives that commodity prices currently face, from a slowing China to a stronger dollar, as well as large overhangs of excess production and inventory… it is perhaps not unreasonable to expect that the price trough may last for some time yet,” British bank Barclays said.
“We expect crude oil prices to show only modest improvements for the next six months, before the conditions to support a sustainable recovery start falling into place by the second quarter of 2016,” it said in a market analysis.
“The key ingredient that is missing this time round is any significant recovery in the global economy to boost demand.”
The International Monetary Fund and the World Bank have slashed their growth projections for the global economy this year and in 2016, including that of China, the world’s top energy consuming nation.
Official data today showed that Chinese imports slumped by nearly 18 percent year-on-year in September.