Oil edged up on Thursday, having hit one-month lows the previous day after an unexpected surge in U.S. inventories and the return of more Nigerian crude to an already oversupplied market.
The oil price has slipped below $50 a barrel despite a pledge by the world’s largest exporters to extend an existing output cut of 1.8 million barrels per day (bpd) into next year in an effort to reduce bulging global inventories.
Adding to concern about supply outstripping demand, Royal Dutch Shell on Wednesday lifted force majeure on exports of Nigeria’s Forcados crude, bringing all the country’s oil grades fully online for the first time in 16 months.
Brent crude was up 43 cents by 0900 GMT at $48.49 a barrel, having fallen 4 percent the day before, while U.S. crude futures rose 38 cents to $46.10 a barrel.
The market has also come under pressure from news of rising output from Libya, which together with Nigeria is exempt from the production cut made by the Organization of the Petroleum Exporting Countries and its 11 partners.
“I’ve been quite bullish for the second half of this year, based on supply and demand balances and I would still not give up on that idea, that rebalancing is going to start in the second half,” PVM Oil Associates strategist Tamas Varga said.
“But if Nigerian and Libyan production is picking up as well as they are now, then slowly, I am probably going to have to start changing my mind.”
In the United States, stocks of crude oil and gasoline surprisingly rose last week as refinery runs declined and exports fell, official data showed on Wednesday.
Nervousness also pervaded the broader financial markets.
Former FBI Director James Comey’s U.S. congressional appearance, a European Central Bank (ECB) policy meeting and the British general election take place on Thursday.
Many investors are wary ahead of Comey’s Senate appearance as they look for any hints that U.S. President Donald Trump may have been engaged in obstruction of justice – an offence that could lead to impeachment hearings.
ECB policymakers are set to take a more benign view of the economy and will even discuss dropping some of their pledges to ramp up stimulus if needed, sources with direct knowledge of the discussions told Reuters.
None of those events “are directly related to oil but all of them could have an impact on the dollar and risk attitudes generally”, said Ben Le Brun, market analyst at OptionsXpress in Sydney.