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SINGAPORE, Singapore—Oil prices were subdued in volatile Asian trade Wednesday as the market digested a report from the the International Energy Agency (IEA) showing that global crude oversupply will persist until next year.
US benchmark West Texas Intermediate for November delivery was up four percent to $46.68 in volatile morning trade that saw the price see-sawing between negative and positive territory.
Brent crude for November declined 0.16 percent to $49.16.
“The fundamentals of oil still have not changed,” Daniel Ang, an investment analyst with Phillip Futures in Singapore, told AFP.
“The market remains in oversupply and with impending Iranian crude possibly entering the market in November, this is really putting a lot of bearishness in the market.”
Iran is expected to start ramping up oil exports by late November after a political agreement with major world powers in July to curb its nuclear programme in exchange for a lifting of crippling economic sanctions.
Demand is struggling to cope with the oversupply amid a slowdown in the global economy this year and is expected to continue into next year.
The monthly IEA report released Tuesday projected that world demand growth would slow from 1.8 million barrels per day in 2015 to 1.2 million bpd in 2016.
“A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels—should international sanctions be eased—are likely to keep the market oversupplied through 2016,” IEA said.
The market is also waiting for the release later Wednesday of US retail sales numbers to further gauge the health of the American economy.
Ang said the retail figures could impact the strength of the US dollar which could also affect the movement of dollar-priced crude oil.
A weaker dollar makes oil cheaper on the international market, while a stronger greenback makes the commodity more expensive.
US crude inventories are also due out on Thursday after the release of weekly data was pushed back by a day due to a public holiday in the United States on Monday.
A Bloomberg News survey showed stockpiles are expected to have increased by 2.58 million barrels in the week to October 9. A rise typically indicates weaker demand in the United States, the world’s top oil consuming nation.
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