Oil steady as oversupply concerns ease

Brent crude futures were up 7 cents, or 0.11 per cent, at $61.08 a barrel

Oil prices steadied on Tuesday on easing concerns about an oversupplied market and the trade dispute between the US and China, the world’s top two oil consumers.

Brent crude futures were up 7 cents, or 0.11 per cent, at $61.08 a barrel at 1320 GMT. The US West Texas Intermediate crude (WTI) contract for November delivery, set to expire on Tuesday, was up 14 cents, or 0.24 per cent, to $57.66.

Prices stabilised on Tuesday after hitting their lowest levels since early May on Monday, amid mounting concerns of oversupply and slowing economic growth resulting from an escalation in the US-China trade dispute and a move by OPEC+ to push ahead with plans to add more oil to the market.

Both WTI and Brent have started to shift to contango market structures, where prices for immediate supply are lower than for later delivery and which typically indicate that near-term supply is abundant and demand is declining.

Some analysts, however, said the concerns over an oil glut were overblown.

Ole Hansen, head of commodity strategy at Saxo Bank, said the market structure had not yet shifted to levels that would encourage large stock builds.

This may signal a market reluctant to fully price in the anticipated surplus – perhaps reflecting expectations that the glut will prove smaller than feared, he said.

The International Energy Agency’s forecast for a massive surplus would lead to a strongly upward-sloped futures curve, called super contango, but that has not emerged so far, UBS analyst Giovanni Staunovo said in a note.

For the week ending October 10, crude builds were more than expected, while gasoline and diesel stocks declined more than forecast.