Oil steadies just above three-month lows on oversupply
(Reuters) Oil prices steadied just above three-month lows on Thursday as producers continued to pump more than needed, filling inventories, and economic growth prospects darkened.
Brent crude oil LCOc1 was unchanged at $43.47/bbl by 1215 GMT, after touching $42.88, its lowest since April 20. US light crude CLc1 was up $0.20 at $42.12.
US government data on Wednesday showed a surprise rise in crude and gasoline inventories. The build added to an already huge global refined product glut just as slowing economic growth dents the demand outlook.
Oil markets have been dogged by oversupply for the last two years and fell by as much as 70% between 2014 and early 2016, when Brent hit the lowest in more than a decade at around $27/bbl.
Markets have since recovered some ground but oil remains very weak and low refining margins are hurting energy companies.
Energy major Royal Dutch Shell reported a more than 70% fall in quarterly profit on Thursday, well below analysts' estimates, as weak oil and gas prices further ate into revenue.
Shell's net income came in at $1 B in the second quarter, compared with expectations of $2.2 B and $3.8 B achieved in the same period last year.
Mihir Kapadia, CEO at wealth management firm Sun Global Investments, said oil was still depressed by concerns over a supply glut and waning demand from leading international markets.
In China, rail freight volume fell 7.5% in the first half of 2016 from the same period a year earlier to 1.58 B tons, the country's top economic planner said on Thursday.
Varga at brokerage PVM said record high stocks and oversupply could drive crude prices down into the mid $30/bbl area before a significant rally.
"The trend is still down and the bears seem to be in control," Varga said, adding: "But we could see an upside correction before driving lower again."
Reporting by Christopher Johnson; Additional reporting by Henning Gloystein; Editing by David Evans and William Hardy
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