Oil markets struggle to find footing after 7 percent slump
Oil markets remained on a weak footing on Wednesday after a 7 percent slump the previous session, with surging supply and expectations of faltering demand pressuring crude prices.
U.S. West Texas Intermediate (WTI) crude oil futures were at $55.66 per barrel at 0043 GMT, down 3 cents from their last settlement.
International benchmark Brent crude oil futures had yet to trade.
Markets fell by more than 7 percent the previous day. They have lost over a quarter of their value since early October in what has become one of the biggest declines since prices collapsed in 2014.
Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown.
The wave of supply is mostly fuelled by soaring production in the United States.
U.S. crude oil output from its seven major shale basins is expected to hit a record of 7.94 million barrels per day (bpd) in December, the U.S. Department of Energy's Energy Information Administration (EIA) said on Tuesday.
That surge in onshore output has helped overall U.S. crude production hit a record 11.6 million bpd, making the United States the world's biggest oil producer ahead of Russia and Saudi Arabia.
Most analysts expect U.S. output to climb above 12 million bpd within the first half of 2019.
"This will, in our view, cap any upside above $85 per barrel (for oil prices)," said Jon Andersson, head of commodities at Vontobel Asset Management.
The surge in U.S. production is contributing to rising stockpiles.
U.S. crude stocks rose by 7.8 million barrels in the week ending Nov. 2 to 432 million, as refineries cut output, data from industry group the American Petroleum Institute showed on Tuesday.
The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC), whose member states rely on high oil prices to finance government budgets, has been watching the jump in supply and price slump with concern.
Led by top exporter Saudi Arabia, OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019 to tighten supply and prop up prices.
"OPEC and Russia are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on Dec. 6," said Andersson.
That puts OPEC and Saudi Arabia on a collision course with U.S. President Donald Trump, who publicly supports low oil prices and who has called on OPEC not to cut production.