SINGAPORE (Reuters) – Oil markets struggled to find their footing on Wednesday after falling by 7 percent in the previous session, with supply surging and the specter of shaky demand that made investors remain nervous.
PHOTO FILE: Oil flows out of the drain from the original well of Edwin Drake 1859 which launched the modern petroleum industry at the Drake Well Museum and Park in Titusville, Pennsylvania USA, October 5, 2017. REUTERS / Brendan McDermid / File Photo
West Texas Intermediate (WTI) US crude oil was at $ 55.54 a barrel at 0159 GMT, down 15 cents from their last settlement.
The international benchmark Brent LCOc1 crude oil futures rose 4 cents to $ 65.51 a barrel.
The market fell more than 7 percent the previous day. Crude oil has lost more than a quarter of its value since early October in what has been one of the biggest declines since prices fell in 2014.
The slump in spot prices has turned the entire curve forward for crude oil upside down.
Spot prices in September were significantly higher than later deliveries, a structure known as backwardness that implies a tight market because it is not attractive to put oil into storage.
In mid-November, the curve has turned into contango, when the price of crude oil for immediate delivery is cheaper than the shipping price later. That implies a market that is oversupplied because it makes it attractive to save oil for sale later.
The oil market was pressured from two sides: a surge in supply and increased concerns about an economic slowdown.
US crude oil production from seven main shale basins is expected to reach a record 7.94 million barrels per day (bpd) in December, the US Department of Energy (EIA) Energy Information Administration said on Tuesday.
The surge in land output has helped overall US crude oil production C-OUT-T-EIA reach a record 11.6 million barrels per day, making the United States the world's largest oil producer in front of Russia and Saudi Arabia.
Most analysts expect US output to rise above 12 million bpd in the first half of 2019.
"This would, in our view, limit the increase above $ 85 per barrel (for oil prices)," said Jon Andersson, chief commodity at Vontobel Asset Management.
The surge in US production contributed to increased stockpiles.
Stocks of US crude oil rose 7.8 million barrels in the week ending 2 to 432 million as refineries cut production, data from the industry group the American Petroleum Institute showed on Tuesday.
The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) has observed a surge in supply and falling prices with concern.
OPEC has increasingly made public statements that it will start holding crude oil in 2019 to tighten supplies and raise prices.
"OPEC and Russia are under pressure to reduce current production levels, which is a decision that we hope will be taken at the next OPEC meeting on December 6," Andersson said.
That puts OPEC on a collision course with US President Donald Trump, who openly supports low oil prices and who has called on OPEC not to cut output.
Reporting by Henning Gloystein; Editing by Joseph Radford