Oil pares gains as oversupply concerns weigh

By Ahmad Ghaddar

LONDON (Reuters) - Oil prices pared gains on Wednesday after falling by as much as 3 percent in the previous session amid concerns that the rebalancing in the global oil market will take longer than originally envisaged.

Prices were supported earlier in the session by data from the American Petroleum Institute (API) which showed a crude build of 1.4 million barrels for the week ended Sept. 9, smaller than the 3.8-million-barrel rise expected by analysts.

The U.S. government will issue official inventory data later on Wednesday.

Brent crude futures were trading at $47.07 per barrel at 1202 GMT, down 3 cents from their last settlement.

 

U.S. West Texas Intermediate futures were down 2 cents at $44.88 a barrel.

"Long suffering oil bulls will now turn nervously to the U.S. EIA's commercial crude inventory numbers," OANDA senior market analyst Jeffrey Halley said.

"It was an unexpected undershoot in these numbers last week that set off the rally in crude last week."

Crude prices tumbled on Tuesday after the International Energy Agency (IEA) said slowing oil demand growth amid growing inventories and supplies could signal that the market will be oversupplied at least through the first half of 2017.

Commerzbank said in a note that the delay in rebalancing is largely due to a rise in production from members of the Organization of the Petroleum Exporting Countries and that the market would be balanced already if OPEC had maintained its production at May's levels.

"Rather than talking about capping oil production as it was planning to do at the end of September, OPEC would be better advised to think about reversing the production growth of recent months," Commerzbank analyst Carsten Fritsch said.

OPEC members are due to meet informally in Algeria this month on the sidelines of the International Energy Forum (IEF). Russia is also expected to attend the IEF.

The chairman of Libya's National Oil Corporation visited the port of Zueitina on Wednesday and said he would work to lift force majeure there, according to the head of a guard force in control of the terminal.

NOC Chairman Mustafa Sanalla said Libyan production could be raised to 600,000 barrels per day (bpd) from about 290,000 bpd within a month.

(Additional reporting by Mark Tay in Singapore; editing by Susan Thomas and Jason Neely)