Brent crude rose today after its biggest fall in five months in the prior session, but prices stayed close to this year's low as weak data and swelling inventories in the United States muddied the demand outlook.
Yesterday’s slide in oil prices was triggered by a US jobs report that showed private sector hiring was less than expected in March. A spike in US oil inventories to their highest since 1990 triggered further downside pressure, quashing any hopes of a robust recovery in oil demand from the top consumer.
"There is now no shortage of oil in the United States or anywhere else, this is very clear, and we can see that the economic recovery is also not as good as we thought it was," said Ken Hasegawa, a commodity sales manager at Newedge in Tokyo. "There is more uncertainty ahead. As such, we see more downside pressure on oil prices."
Brent for May delivery rose 36 cents to $107.47 a barrel by 0631 GMT, less than a dollar away from this year's low of $106.78 hit yesterday.
Brent slipped more than 3 per cent in the previous session, its biggest daily fall since early November.
US crude was up 6 cents to $94.51 a barrel, after shedding almost 3 per cent in the previous session for its biggest drop in four months.
Markets are now waiting for key US jobs data due tomorrow for clues to the health of the world's largest economy and indications on its appetite for oil.
US crude stocks rose 2.71 million barrels in the week to March 29th, compared with analysts' expectations for a rise of 2.2 million barrels, data showed today.
The stocks now total more than 388 million barrels, close to the all-time peak of 391.9 million barrels hit in 1982.
According to a Reuters technical analysis, US crude is expected to extend its losses to $93.57 a barrel, while Brent is seen dipping towards $105.66 a barrel.
Brent's premium to US crude was at $12.96 a barrel. It hit a more than one-week high of $14.66 on Tuesday amid concerns a prolonged Exxon pipeline outage in the Midwest could lead to a buildup in stockpiles near the delivery point of the US benchmark contract in Cushing, Oklahoma.
However, oil prices may draw support from supply worries stemming from the standoff between Iran and the West over Tehran's disputed nuclear programme. Escalating tensions on the Korean peninsula are also in focus.
Investors are anxiously watching the Korean peninsula, after the United States said it was sending a missile defence system to Guam to defend it from any attack from North Korea.
The announcement came just hours before North Korea's army said it had ratified an attack against the United States, potentially involving a nuclear strike, the latest in a series of provocations testing president Barack Obama's policy of "strategic patience" with Pyongyang.
Also being watched are talks between Iran and six major world powers on Tehran's nuclear program set to take place tomorrow and Saturday in Almaty, Kazakhstan.
Reuters
