Crude oil dropped Tuesday, following the release of bearish supply estimates from the International Energy Agency.
Crude’s early advance had been mainly driven by bargain hunting, according to analysts who also note that the cool rise in China’s oil imports last month was uninspiring.
U.S. crude oil was last up 0.47% at $47.30 a barrel from the high of $47.70 earlier in the day, while global benchmark Brent was up 0.48% to $50.49 from $51.03 earlier.
The IEA warned that oil markets would likely remain oversupplied next year, as oil demand growth slows down as the Iranian oil is coming back to the market.
“A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels - should international sanctions be eased–are likely to keep the market oversupplied through 2016,” the agency said.
The agency trimmed its forecast for oil demand growth for next year by about 200,000 barrels a day compared to its previous assessment in September.
Downbeat data from China also weighed on oil prices.
Earlier, official figures showed that China's trade surplus widened to $60.3 billion last month from $60.2 billion in August, compared to estimates for a surplus of $46.8 billion.
Chinese exports slumped 3.7% from a year earlier, better than forecasts for a decline of 6.3%, while imports dropped 20.4%, far worse than expectations for a drop of 15.0%.
China’s September crude-oil imports climbed 1.4% year-over-year to 27.95 million tons, rising 8.8% year-over-year to 248.62 million tons in the first nine months of the year.
“The rise in crude imports isn’t too impressive considering the broader prolonged imports decline,” said Virendra Chauhan, an oil analyst at Energy Aspect. Most of the Chinese buying of crude oil in recent months was likely to leverage the current price slump to build up reserves, the analyst said.
On Monday oil prices fell more than 5% on news of higher output by the Organization of the Petroleum Exporting Countries.
