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Oil staged a minor rebound on bargain-buying in Asian trade today following sharp falls that have seen prices hit multi-year lows owing to a supply glut and weak global demand, analysts said.
US benchmark West Texas Intermediate (WTI) for November delivery climbed five cents to $81.89 a barrel in late-morning trade and Brent crude for November added 39 cents to $85.43.
WTI is still languishing at two-year lows after plummeting 4.5% in New York yesterday as the International Energy Agency slashed its oil demand forecast in light of slowing economic growth in Asia and Europe.
Brent yesterday tumbled 4.3% to levels not seen since 2010.
The International Energy Agency said it expects demand to rise by just 700,000 barrels per day to 92.4 million barrels per day this year, 200,000 fewer than its previous growth forecast.
Market-watchers have blamed the slump in demand on weak growth in China, the world's biggest energy consumer, and the eurozone, which some analysts have warned is flirting with recession.
Adding to the pain is an oversupply of the black gold caused by strong US production of shale gas and a return of Libyan oil on to the market after facilities that were closed due to civil unrest resumed operations.
Members of the Organisation of the Petroleum Exporting Countries (OPEC) are also maintaining output levels, while slashing prices to gain market share, analysts said.
"At some point, dwindling oil prices should be a positive for businesses but global headwinds, which include an Ebola outbreak and signs of slowing growth in China and Europe, have the upper hand for now," said Desmond Chua, market analyst at CMC Markets in Singapore.
DBS Bank of Singapore pointed to concerns over weak growth in Europe's core economies France, Germany and Italy.
"We're not talking about Portugal and Greece anymore. It's the big guys that are shrinking," it said, adding that "the eurozone is on the cusp of its third recession in five years."
