Oil erased early losses on Tuesday, but stayed below $50,
pressured by an oversupply and worries about a vulnerable demand
outlook.
U.S. crude rose 1.56% to $46.86 a barrel, while Brent futures were up 1.07% to $49.31.
Prices took a hit Monday after data indicated China’s manufacturing activity contracted again last month. The bearish sentiment was further deepened on news of expected new supplies. Iran is said to raise crude production by 500,000 barrels a day by year-end and Russia’s oil production reached a new post-Soviet high in October, according to various reports.
Moreover, Gulf oil producers are postponing some field maintenance until next year to keep production high and reduce costs as they forecast ongoing low oil prices in 2016.
An expected dip in U.S. oil production as a result of low prices is unlikely to undermine a glut significantly, as it is seen remaining at 1-2 million barrels per day on average for 2015.
Goldman Sachs said in a note:
"Our framework suggests that (U.S.) production would drop by 35,000 barrels per day in 2016 at the current rig count under our well deferral scenario, more than the 20,000 barrels per day year-on-year decline estimated a week ago."
It added that there are also signs that production could increase.
The American Petroleum Institute was expected to post its preliminary inventory data later Tuesday before official numbers on Wednesday from the U.S. government.
Pricing agency Platts forecasts the U.S. commercial crude stock to have risen for the sixth consecutive week, adding 2.45 million barrels in the week ended October 30. It also expects the refinery utilization rate to climb 0.2% to 87.8%, suggesting the seasonal maintenance period may be over.
