Brent crude and WTI oil prices edge up after yesterday's massive losses

 
Courtney Goldsmith
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Domestic Oil And Gas Production
This week's declines have been the worst of 2017 (Source: Getty)

Oil prices have recovered slightly after their worst slump in more than three months.

Brent crude, the global benchmark, was trading at $52.37 a barrel, up 0.34 per cent from the previous close. West Texas Intermediate prices traded 0.43 per cent higher, but still below $50, at $49.49 a barrel.

Yesterday, crude prices plummeted more than 2.5 per cent on data from the US Energy Information Administration (EIA) showing oil stocks were well above analyst forecasts.

The EIA reported US crude inventories rose by 8.2m barrels last week to 528.4m barrels, an all time high. Analysts were predicting a 2m barrel rise.

The Organisation of the Petroleum Exporting Countries (Opec) has plans to reduce oil production from its member countries by around 1.8m barrels per day (bpd) to prop up prices and cut the global glut.

Despite the cartel reaching record compliance with its proposed cuts, there's been little impact on inventory levels.

In a closed-door meeting, Senior Saudi officials told US oil firms they should not assume Opec will extend output curbs to offset rising production from US shale fields, sources told Reuters.

Analysts expect a period of consolidation after this week's sharp falls, with prices rising before another possible sell-off if investors are forced to ditch loss-making futures contracts.

Rising oil inventories in the US "suggests a slippery path for energy prices moving forward, especially given the US’ will to decrease its energy dependency on the rest of the world under Donald Trump’s rule", said Ipek Ozkardeskaya, analyst at London Capital Group.

"The market remains overwhelmingly long and any further weakness will force additional reductions," Saxo Bank's head of commodity strategy, Ole Hansen, told Reuters Global Oil Forum.

Earlier this week, oil prices fell as investors worried China will cut oil demand after it reduced its growth target for 2017 to its lowest level for more than 20 years.

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