Oil up after United States storage slips, global glut concerns remain

“Upending year-earlier forecasts that Chinese gasoline demand would struggle in 2015, confirmed data for the first ten months of the year show growth of roughly 10.4 percent year-on-year” the International Energy Agency said in its monthly oil report.

Brent crude futures were down 29 cents at Dollars 39.44 a barrel at 0551 GMT, a touch above a near-seven-year low hit earlier in the session at USD 39.38 a barrel.

Production from outside OPEC will contract by 600,000 barrels a day next year, compared with a surge of 2.4 million a day in 2014, the IEA predicts. “No, you can’t”, he said, although adding that prices were not likely to fall that far.

OPEC trimmed its estimates for supplies from outside the group in 2016 on Thursday as it expects the plunge in prices to takes its toll on the USA oil industry and other rival producers in the coming months.

Oil declined to its lowest level since 2008 as analysts warned that global oversupply will persist into 2016.

The IEA’s forecast follows a string of reports, from the Organization of Petroleum Exporting Countries to the World Bank, saying global economic growth is not enough to take on the surplus of crude oil on the market.

Driven by cartel kingpin Saudi Arabia, this strategy is aimed at maintaining market share and squeezing out United States producers of shale oil, whose output has boomed in recent years but which need a higher oil price to make money. The current production is 0.9 MMbpd more than OPEC’s 2016 demand.

OPEC’s report “fell easily within (the) range of expectations”, Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates, explaining its lack of positive impact.

Oil has traded in a tight range close to $40 per barrel since Monday when it fell to its lowest since 2009.

Oil futures dropped as much as 1 per cent in NY and are down 8.6 per cent this week.

OPEC production rose by 230,000 barrels a day last month, according to secondary sources that track OPEC’s production levels.

OPEC’s crude oil production increased to 31.5 mb/d during last two years, 1.5 mb/d more than the determined 30 mb/d.