Oil prices steadied on Thursday as expectations of an OPEC deal to limit production were balanced by growing evidence of heavy oversupply and rising stocks, particularly in the United States.
U.S. crude inventories rose by 5.3 million barrels in the week to Nov. 11, well above forecasts of an increase of 1.5 million barrels, data from the U.S. Energy Information Administration showed on Wednesday.
Stocks are also rising elsewhere, thanks in part to record output by oil producers in the Organization of the Petroleum Exporting Countries, which pumps around 40 percent of the world oil supply.
OPEC countries are due to meet on Nov. 30 to discuss limits on production, and may even agree a cut in output in an attempt to push up prices, but data shows global supply continues to increase.
Brent crude oil LCOc1 was up 10 cents a barrel at $46.73 by 0920 GMT. U.S. light crude CLc1 was up 15 cents at $45.72.
“The name of the game is ‘volatility’ as confusing signals are arriving before OPEC meets,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.
“We have evidence of oversupply – U.S. stocks rising – versus hopes for some action by OPEC.”
OPEC countries are ready to reach a “forceful” agreement on cutting oil output, Venezuelan President Nicolas Maduro said on Wednesday, following a meeting with OPEC Secretary-General Mohammed Barkindo in Caracas.
Russia has expressed willingness to support an OPEC decision to freeze oil output, Russian Energy Minister Alexander Novak said, adding he might meet Saudi Arabia’s Energy Minister Khalid al-Falih at a conference in Doha this week.
But rising oil production and changing fundamentals “make a credible OPEC cut all the more difficult to achieve”, Jason Gammel, analyst at U.S. investment bank Jefferies, said.
“The physical market has shifted back to oversupply because of surging OPEC output, with the most material increases driven by improving security conditions in Libya and (tenuously) Nigeria,” he said.
Jefferies expects Brent to average $58 a barrel next year.
By Christopher Johnson
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