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 Brent futures are down more than 6 percent this week and having
dipped below $40 per barrel there are renewed expectations it might
test 2008's low around $36.
Brent futures were up 12 cents $40.23 per barrel at 1210 GMT (0710
EDT), having traded as high as $40.70.
West Texas Intermediate (WTI) U.S. crude futures were down 11 cents
at $37.05 per barrel, erasing early gains. WTI is down nearly 13
percent this month.
Crude inventories fell 3.6 million barrels in the week to Dec. 4,
compared with analysts' expectations for an increase of 252,000
barrels, U.S. Energy Information Administration (EIA) data showed.
"It's a glimmer, and for now we're consolidating above $40 per
barrel. But OPEC showed last week it's a paper tiger in that it
won't do anything to prevent supply growth," said Michael Hewson,
chief market strategist at CMC Markets.
The Organization of the Petroleum Exporting Countries last week
failed to reach an agreement on production quotas, leading to fears
that increased production from Iran and elsewhere would deepen the
glut further.
OPEC forecast on Thursday that oil supply from non-member countries
will fall more sharply next year, a development that would suggest
its strategy of defending market share is working.
Hewson said that in thin liquidity up to year-end there is a good
chance that Brent will fall below its low since 2008 at around $38
per barrel.
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Still, there were signs of more demand from China, the world's
second-biggest oil user. Vehicle sales were up 20 percent in
November from a year earlier to 2.5 million vehicles, the China
Association of Automobile Manufacturers said.
However there was also fresh evidence of market oversupply. The EIA
data showed that U.S. distillate stockpiles rose by 5 million
barrels, twice the expected increase and the sharpest increase since
January.
Between 500,000 and 2 million barrels of crude oil are being
produced in excess of demand every day, creating a glut that has
pulled down prices by almost two-thirds since 2014.
The excess supply is being pushed into storage and threatens to fill
existing facilities.
(Additional reporting by Roslan Khasawneh in Singapore; editing by
Jason Neely)
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