Update Oil prices stable, under pressure from glut worries

by **Cals** Fri 30 Oct 2015, 03:08

Update

[size=28]Oil prices stable, under pressure from glut worries

By Reuters / Reuters | October 29, 2015 : 10:27 PM MYT

TOKYO/LONDON (Oct 29): Crude oil traded little changed on Thursday in a volatile session, with the Brent benchmark hovering around US$49 per barrel as short-covering by hedge funds prevented the market from testing new lows amid relatively bearish data.

Brent and U.S. crude fell by around 80 cents in Asian and European trading but later jumped into positive territory with the opening of the U.S. markets, following a pattern observed on Wednesday.

In the previous session, Brent and U.S. crude jumped by 5%-6% but traders and analysts struggled to identify one driving force.

"The rally in oil prices was likely amplified by short-covering as hedge fund futures positions remain excessively bearish," said the head of commodities research at Julius Baer, Norbert Ruecker.

On Thursday, gains were capped by a series of bearish data releases.

U.S. economic growth braked sharply in the third quarter as businesses cut back on restocking warehouses to work off an inventory glut.

However, solid domestic demand could still encourage the Federal Reserve to raise interest rates in December, which would boost the dollar and depress commodity prices.

The dollar held near 2-1/2-month highs against the euro on Thursday, after the Fed signalled it may not wait until next year to raise rates, highlighting the divergent policies of the world's most influential central banks.

"In the mid term, we will be still driven by the global oil glut worries. It is tough to see oil trading above US$50 per barrel," ING analyst Hanza Khan said.

On Wednesday, U.S. government data showed U.S. crude stocks rose last week, while gasoline and distillate inventories fell more than expected.

Crude inventories climbed in line with trader expectations but the build-up was less than the 4.1-million-barrel increase reported by the American Petroleum Institute, an industry group, a day earlier.

Stockpiles at the Cushing, Oklahoma delivery hub for U.S. futures fell by 785,000 barrels, giving a bullish tone to the report.

"The crude stock story might gain further momentum as despite a year-on-year fall of just over 1,000 rigs in the Baker Hughes oil rig count, we would caution that the widely expected fall in U.S. crude oil production could be significantly lower than many are expecting," JBC Energy consultancy said in a note.
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