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 The American Petroleum Institute said on Tuesday crude stocks
increased by 1.6 million barrels last week. Stocks are already at a
record, according to the U.S. government's Energy Information
Administration (EIA), which issues its latest report on Wednesday.
Crude had come under pressure on Tuesday from International Energy
Agency (IEA) forecasts of continued supply growth in the United
States to 2020 despite lower prices, and of a possible further rise
in stocks to a record high this year.
"The supply growth in 2015 is likely to continue unabated, albeit at
a somewhat lower rate," Fereidun Fesharaki at Facts Global Energy
said in a note to traders.
"This all means a weak market in 2015 and even lower oil prices.
Demand rebound will not save the oil market."
Brent crude futures were down 90 cents at $55.53 by 1037 GMT (05:37
a.m. EST). U.S. crude traded at $49.52, down 50 cents, having
reached a high of $51.14 earlier in the session.
After more than halving since June, oil prices have rallied by over
20 percent in the last four weeks. Kuwait's Oil Minister Ali al-Omair
said on Wednesday that crude prices could rise to $60 a barrel by
the end of the year.
But analysts agreed with IEA predictions that following the crash,
oil prices would stabilize well below the highs of more than $100 a
barrel seen in the last three years.
Jefferies Bache analysts said Brent and U.S. crude, known as West
Texas Intermediate (WTI), would fall in the short term as the market
responded again to oversupply.
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"We still expect fresh WTI lows and an ultimate decline towards the
$40 area," they said in a note to traders. "Assuming our $40 WTI
target is achieved, a nearby Brent price in the $48 area would be
implied."
"All in all, we are maintaining a bearish stance."
Adding further pressure on prices, the EIA kept its 2015 and 2016
domestic oil output forecasts virtually unchanged from the previous
month.
The EIA expects U.S. oil production in 2015 to be 9.3 million
barrels per day, slightly lower than the 9.31 million bpd forecast
in last month's short-term energy outlook.
(Additional reporting by Meeyoung Cho in Seoul and Adam Rose in
Beijing; Editing by Dale Hudson)
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