Oil prices recovered slightly from April lows on Thursday, but the outlook for the industry remained weak as crude producers and fuel refiners continue to pump out more than the market can consume.
International Brent crude oil futures were trading at $43.58 at 0454 GMT, up 11 cents from their previous close. US West Texas Intermediate (WTI) crude was at $42.04, up 12 cents.
Brent and WTI hit their lowest since April in the previous session, at $43.27 and $41.68 per barrel, respectively, after US government data revealed a surprise build in crude and gasoline inventories. The build adds to an already huge global refined product glut just as slowing economic growth dents the demand outlook for crude.
“Oil prices were sold off heavily after the weekly EIA report showed a surprise build in crude oil inventory. The 1.7 million barrel increase (to 521.1 million barrels) was against market expectations of a 2.3 million fall. US oil production also increased,” ANZ bank said on Thursday.
“Oil remains weak, with the surprise build in US stocks likely to linger into today's trading,” it added.
Oil markets have been dogged by oversupply for the last two years, which pulled down prices by as much as 70 per cent between 2014 and early 2016, when Brent hit the lowest in more than a decade at around $27 per barrel.
Mihir Kapadia, CEO at wealth management firm Sun Global Investments, said that oil prices were still being depressed by concerns over a global supply glut and waning demand from key international markets.
“It seems likely that the global oil engine will stop stalling over the coming months, but it will take more time still for the market to pick up speed,” he said