LONDON (Reuters) - Oil prices hovered just above $50 a barrel on Thursday after falling heavily the previous session as U.S. government data showing a ninth straight weekly increase in crude inventories.
U.S. crude oil futures
Brent crude oil for May
Oil prices have fallen almost 14 percent from last week's record high above $58 a barrel, on news that global supply would rise while demand could ease.
Saudi Arabia told Asian refiners and majors this week it would boost daily supplies by half a million barrels in May, sources said, as the International Energy Agency forecast that China's oil demand growth was slowing from last year's fast pace.
Some analysts believe the downside risks are limited.
"I don't think oil prices will go below $50 a barrel because there are funds out there who will buy in if that happens. Most funds are still bullish over the medium to long term," Noboru Kamakura, Mitsubishi Bank's general manager of risk management, said from Tokyo.
U.S. crude oil inventories, already at the highest level in nearly three years, rose another 3.6 million barrels to 320.7 million last week, the U.S. government's Energy Information Administration said.
Gasoline stocks climbed by 800,000 barrels to 213.1 million, snapping a five-week slide that has raised anxiety over supplies ahead of summer when Americans take to the roads.
Despite recent losses, prices are still up 16 percent from the start of the year, with speculative players still seen keen on energy markets.
Middle East Gulf producers are eager to raise output to encourage stock-building in the coming months, creating a buffer for strong demand later this year, but OPEC members Nigeria, Algeria and Venezuela have said more oil was unwarranted.
With oil prices now almost $5 below the cartel's $55-a-barrel threshold for triggering a second increase in production, opposition to the Gulf moves could intensify.
The Organization of the Petroleum Exporting Countries raised output limits by 500,000 barrels per day (bpd) in March to 27.5 million bpd, leaving room for a second rise if oil prices remained high.
© Reuters Limited. All Rights Reserved.
Reproduction or redistribution of Reuters content, including framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.
