Oil prices edge up on Paris attack tensions, but market remains oversupplied

Light, sweet crude for December delivery recently traded down 22 cents, or 0.5%, to $40.53 a barrel on the NY Mercantile Exchange.

Moderate autumn temperatures in the United States have raised expectations for another increase in USA commercial crude stockpiles in the country this week, keeping the downward pressure on prices.

The OPEC heavyweight pumped 10.226 million bpd in September, slightly lower than August’s 10.265 million but it still maintained high output in line with its strategy of defending market share.

“Ultimately the focus will return to the balance of demand relative to supply, and until inventory data provides evidence of a tighter supply, the path of least resistance will be lower”, said Michael Hewson, chief market analyst at CMC Markets, according to Reuters. Official inventory data from the U.S. government’s Energy Information Administration is due on Wednesday.

“The Paris tragedy may warrant a few uptick in geopolitical premia but this is likely trumped by near-term negative impacts on European oil demand”, said Ed Morse, global commodities strategist at Citi in NY. We have passed our competitors across the globe to become the world’s largest producer of oil and natural gas, already producing almost 75 million barrels of crude oil this year alone.

Brent crude, the global oil benchmark, rose 1% to $45.04 a barrel on Londons ICE Futures exchange.

Distillate inventories decreased by 800,000 barrels last week and remain in the middle of the average range for this time of year.

Although Wednesday’s gains were positive, analysts expect prices to still remain low for the remainder of the year and into 2016.

The U.S. Federal Reserve’s broadly upbeat summary of the USA economy also lifted confidence, with most markets in Asia advancing after a rally on Wall Street.

Oil prices have tumbled from a peak of around $102 per barrel in June previous year, to just below $48 per barrel today.

Internationally traded Brent was at $44.66 a barrel, up 19 cents. The oil in storage is comparable to a months’ worth of global oil consumption. Prices tested the August 2015 lows due to the appreciating dollar and record inventory.

“The fact that both crude oil and combined crude and product stocks are near record levels is a reason for concern”, Barclays bank said in a research note. According to David McWilliams, an Irish economist, famed author and economist Nassim Taleb, author of The Black Swan, told an audience at an Irish economics forum that he believes oil prices could fall as low as $4 per barrel.