SINGAPORE: Oil prices climbed in Asia on Thursday, holding above $45 a barrel following a fall in US crude production, but concerns over excess global supplies and soft demand continued to cap gains.
Official numbers showed China’s manufacturing sector shrank for a second straight month in September, highlighting the challenges facing the world’s second-largest economy.
In the United States, a closely-watched report seen as a gauge for oil demand in the world’s biggest economy showed that commercial crude inventories rose by four million barrels to 457.9 million barrels in the week ending September 25.
That was about 28 percent higher than a year ago, keeping inventories at a level not seen in at least 80 years for this time of year, said the US Department of Energy report.
A build-up in commercial inventories indicates softer demand.
But the report also showed US crude production falling by 40,000 barrels per day to 9.096 million barrels per day (bpd), which is positive news for the oversupplied global market.
Meanwhile, output from the OPEC group of oil exporters stood at 32 million bpd in September, down from previous month but still above its quota, Bloomberg News said.
In afternoon Asian trade, US benchmark West Texas Intermediate (WTI) for November delivery was up 60 cents to $45.69 and Brent crude for November added 43 cents to $48.80 a barrel.
“Oil prices remain stuck within the month-long consolidation range, with WTI trapped within $40 to $50, and Brent within $45 to $55,” said Bernard Aw, market strategist at IG Markets in Singapore.
“Mixed signals probably act as a two-way force on crude prices, as US production continues to decline while OPEC produced above its 30 million a day quota for the 16th month in September.”
Aw said traders will also be digesting the implications of the official manufacturing data from China which was released Thursday.
“Given how sensitive the global markets are to all things out from China, these manufacturing numbers will be closely watched, and should continue to reinforce the slowing China narrative,” he said.