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Oil steady above $50 as investors take stock after slide

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Reuters LONDON
Last Updated : Jan 07 2015 | 9:41 PM IST

By Simon Falush and Himanshu Ojha

LONDON (Reuters) - Brent crude oil recovered slightly after falling below $50 a barrel on Wednesday for the first time since May 2009, as traders took stock after a sharp slide since the start of the year.

A growing supply glut and weak global demand have pushed crude down by more than half from a peak above $115 in June last year, with prices down by more than 10 percent so far in 2015.

Further evidence of a supply glut came from weekly Energy Information Administration data which showed U.S. gasoline and distillate inventories rose far more than expected, although crude stocks fell.

Benchmark Brent crude futures fell 35 cents to $50.75 by 1538 GMT, having fallen as low as $49.66, a level last seen in May 2009.

"I wouldn't be surprised if we trundle around the $50 mark for a few sessions as investors consolidate their positions just as they did when prices hit $60," Sucden analyst Kash Kamal said.

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Some firm economic data from the United States helped support prices. U.S. private employers added 241,000 jobs in December, beating the median forecasts of analysts, a report by a payrolls processor showed.

Brent fell in the previous four sessions as stockpiles of oil mount with no signs of a cut in production from OPEC.

U.S. crude futures were down 13 cents to $47.80 a barrel, having fallen to $46.83, their lowest since April 2009.

The slide in oil prices has increased fears of deflation, which has further clouded the demand outlook following a series of weak economic data.

In the euro zone consumer prices fell more than expected, and turned negative in December for the first time since October 2009, a first estimate by the European statistics office showed.

Nobuyuki Nakahara, a former oil executive and ex-member of the Bank of Japan's policy board, told Reuters he expected further price falls.

"Oil prices are likely to keep falling due to slower Chinese growth and because the years of prices above $100 before the recent plunge were 'abnormal' historically," he said.

(Additional reporting by Henning Gloystein in Singapore and Yoshifumi Takemoto in Tokyo; Editing by Michael Urquhart)

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First Published: Jan 07 2015 | 9:20 PM IST

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