Oil rose above $47 a barrel today but the gains could be limited as further signs of weakening US oil demand are expected to emerge in weekly data due out later in the session.
The market has fallen $100 a barrel from July's record high of $147.27 to stand at a 3 1/2-year low, pressured by the gloomy economic outlook and after OPEC deferred a decision on whether to cut supplies until a December 17th meeting.
US crude rose 35 cents to $47.31 a barrel by 12.20pm. It settled down $2.32 at $46.96 yesterday, the lowest settlement since May 2005. Brent crude gained 24 cents to $45.68.
"It's a correction after yesterday's fall," said Christopher Bellew of Bache Commodities, referring to oil's gain. "It's coming at a surprising time because the data is supposed to show further builds."
US stocks data, to be released at 3.35pm, are expected to show a 1.7 million-barrel rise in crude inventories for the week ended November 28th, the third consecutive week of increases, according to a Reuters poll.
Distillate stocks were forecast to show a 300,000-barrel increase while gasoline supplies could be up 900,000 barrels as demand probably fell, even with lower pump prices ahead of the Thanksgiving holiday, some analysts said.
Recession worries could have kept many Americans closer to home than usual this Thanksgiving, the American Automobile Association said.
The US National Bureau of Economic Research said on Monday the current recession, in which the US has been plunged for a year, could be the worst since World War Two. Adding further pressure on prices, supplies appear to be falling more slowly than expected.
OPEC oil supply fell in November for a third consecutive month as members began to implement a deal to cut supplies in a move to halt the slide in oil prices, a Reuters survey showed on Tuesday.
But the survey suggested the Organization of the Petroleum Exporting Countries met only 66 percent of a pledge to lower output by 1.5 million barrels per day in November, less than analysts expected.
"We suspect that prices could move even lower from here, at least through to OPEC's next meeting," Edward Meir, analyst at MF Global, said in a report.
Reuters