Oil Prices Fighting To Hold Support Levels

Crude oil rebounded a bit on Tuesday but was limited by the gains in the US dollar. WTI traded at 45.95 this morning gaining an additional 20 cents while the greenback added 18 points to 98.22. Brent oil was up just 5 cents at 50.24 struggling at the $50 support/resistance level.  Analysts said oil prices could have further to fall in the near term. The market remains oversupplied, and demand typically declines at the end of the busy summer-driving season.

After the market closed on Tuesday the American Petroleum Institute released its weekly stock report. U.S. API weekly crude stocks fell more-than-expected last week, official data showed. In a report, The API said that its Weekly Crude Stock fell to -2.400M, from -1.900M in the preceding week.

Brent crude oil prices rose above a key support level of $50 on Wednesday, recovering from multi-month lows, as investors await U.S. oil inventories data to gauge supply.

Oil markets paused for a breather after prices tumbled about 20 percent in July because of a supply glut.

OPEC continued to pump at record rates in July and U.S. shale oil production showed no sign of abating as drillers added more rigs in past two weeks. A landmark nuclear deal struck between Tehran and world powers has sparked concerns of more Iranian oil returning to global markets and worries about fuel demand growth has also dragged down oil prices.

Oil recovered to just above $50 a barrel on Tuesday after touching a six-month low in the previous session, although high global production and concern over the economic outlook in China weighed on the outlook.

The bounce came as a weaker dollar and a rally in Chinese equities helped commodities post gains following a steep slide on Monday, when a global commodities price index plunged to a 12-year low. Crude has come under pressure from mounting signs of ample supply and a weakening of the demand outlook. Brent fell 18 percent in July, while US crude’s 21 percent decline was its biggest monthly decline since the 2008 financial crisis.

Oil output from the Organization of the Petroleum Exporting Countries (OPEC) reached the highest monthly level in recent history in July, a Reuters survey found, and Iran’s nuclear deal with world powers has raised the prospect of even more oil supply.

OPEC made a historic policy shift in November 2014, choosing to defend market share against rising output from rival producers rather than cut output to support prices. Since then, it has boosted production by more than 1.7 million barrels per day (bpd) — almost 6 percent.