Oil prices edged up on Wednesday in a further sign of support around current levels, but analysts fretted that the outlook for the next six months remained bleak due to oversupply.

Oil fell as much as 5 per cent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and key producer Iran hinted that the prices could drop to $25 a barrel without supportive OPEC action.

Prices stabilised on Wednesday, with traders pointing to buying this week whenever benchmark Brent crude oil dropped towards $48 a barrel.

Brent was trading at $48.44 a barrel at 0413 GMT, up 45 cents from its last settlement, while US crude was up 48 cents at $46.95 a barrel.

Weak trend seen

But analysts said they expected low prices to continue for the next half-year.

“We see little scope for avoiding a large stock build in 1H15 and therefore anticipate weak prices... Commodity price strength is inversely related to the dollar. With the US in monetary tightening mode and Europe and Japan in an expansive phase, an expected stronger dollar will create headwinds for any upward oil price improvement,’’ BNP Paribas had said in a note overnight.

Lower oil prices are bringing down inflation in many countries, especially Asian and European economies that have to import to meet a lot of their demand.

“Headline inflation rates have come down sharply in developed economies because of low oil prices ... The global low-inflation environment has created room for policy easing in key economies, most notably in the euro area,’’ US-based Pira Energy Group had said in an overnight note.

Related Topics