OIL PRICE: $42.07
REUTERS wrote, oil edged higher to $42 a barrel on Wednesday after hitting its lowest since April the previous day, supported by an industry report showing a fall in U.S. inventories and a weaker dollar.
But prices could struggle to make much headway, analysts said, as sentiment remains bearish. A supply glut that has weighed on prices could increase if oil exports actually restart from ports in Libya that have been closed since 2014.
Brent crude LCOc1 was up 27 cents a barrel at $42.07 at 0957 GMT (0557 EDT). It reached $41.51 on Tuesday, the lowest since April 18. U.S. crude CLc1 added 28 cents to $39.79.
"The sentiment is still quite negative and depressed on oil prices," said Eugen Weinberg, analyst at Commerzbank.
"There are factors which should be supportive, but at the moment I think there is no single (piece of) news which would convince the bears that the decline is over."
The U.S. dollar stayed close to a six-week low against a basket of currencies, lending oil some support. Weakness in the dollar makes dollar-denominated commodities cheaper for other currency holders.
Also supportive was Tuesday's American Petroleum Institute report on U.S. inventories, which showed a 1.34 million-barrel drop in crude stocks, although the decline was about in line with analyst expectations.
Oil rallied from a 12-year low near $27 in January to a 2016 high of almost $53 in June, supported by an initiative from OPEC and outside producers including Russia to freeze output and by hopes that the supply glut would ease.
But the output deal fell apart and since June, signs that the glut is proving more resilient as well as concern about slowing economies in Asia - the driver of oil demand growth - and Europe have weighed.
"Risks for oil remain skewed to the downside in 2H16," analysts at Morgan Stanley said a report. "Supply disruptions and risk appetite were supportive April-June, but fundamental headwinds are growing, which outnumber any recent positives."
Not all share that view. Standard Chartered bank said there was "no fundamental justification for recent oil-price falls" and "the global oil market has rebalanced, and U.S. crude supply and inventories are expected to fall."
The U.S. government's report on oil inventories is due for release at 1430 GMT. Analysts in a Reuters poll expected declines in both crude and refined product stocks.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.