Oil market rebalancing has begun, will take time: IEA

Meanwhile, the spread between the Brent and the WTI crude contracts stood at 7.08 a barrel, compared to 6.88 by close of trade on Wednesday.

The views from the IEA are more bullish than those of OPEC, which on Tuesday raised its forecast of oil supplies from non-member countries.

Iran exported about 1.4 million barrels a day in 2014, about half the amount it was shipping before western sanctions took effect in 2011.

U.S. benchmark West Texas Intermediate for September delivery turned higher in afternoon trade, rising 10 U.S. cents to US$43.40.

Oil headed for the longest run of weekly declines since January amid signs the global glut that’s driven prices to the lowest in six years will be prolonged. Recent data from the US government showed that oil production in May fell the most since July 2011, as producers face low prices created by a global glut in oil.

“The lowest crude prices in six years might not be enough to put the brakes on the U.S. supply growth”.

China’s yuan hit a four-year low on Wednesday, slipping further a day after authorities devalued it to support its struggling economy, where industrial output was reported short of expectations.

A rise in the dollar, after news of higher U.S. retail sales in July and strengthening employment data, added to the weight on oil.

“On the other side of the equation, global supply continues to grow at a breakneck pace – now running 2.7 million barrels a day above a year earlier – despite a collapse in oil prices”.

“An increase in OPEC production is certainly not ideal for the oversupplied market at this point in time”, Ang added.

In 2015 Severomorsk Brent is $54.4 per barrel; in 2016 it will cost $59.42 per barrel. World oil production is running at up to 3 million barrels per day (bpd) above consumption, analysts say, increasing stockpiles in all continents and depressing spot markets for crude and oil products such as gasoline and jet fuel.

The market could see a cascade of sell orders from now on, driving prices even lower, as more technical levels are broken, some analysts said.