By Meeyoung Cho
SEOUL (Reuters) - Brent crude futures hovered near 1-1/2 week lows on Thursday as a persistent global glut dragged on the market, while U.S. oil prices extended losses on a jump in domestic stockpiles.
Brent (LCOc1) rose 15 cents to $49.30 a barrel by 0527 GMT, having ended down 9 cents at $49.15 on Wednesday. It hit a low of $48.71 in the prior session - the weakest since Oct. 5. U.S. crude (CLc1) slipped 15 cents to $46.49 a barrel, stretching its losses so far this week, after settling down 2 cents at $46.64.
"(U.S. oil) remained under pressure as the focus turns to U.S. crude inventories. The sustained period of lower crude oil prices has started to impact the credit profile of companies," ANZ said in a note on Thursday.
Data from industry group the American Petroleum Institute showed U.S. crude stocks rose by 9.4 million barrels in the week to Oct. 9 to 465.96 million, versus analyst forecasts for a 2.8 million barrels build. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.4 million barrels, API said. [API/S]
Daniel Ang at Phillip Futures said in a note that a further drop in oil prices was possible given another inventory data by the U.S. Department of Energy's Energy Information Administration later in the day. [EIA/S]
"The crack spreads have narrowed near to levels we have seen 2 years ago. If this continues, we may be seeing spreads reaching to 5 year lows," Ang said.
"This clearly shows the oversupply in the market which has spilled over even to refined products. On the side note, with the spreads narrowing to such an extent, we would think that this illustrates how low oil prices have become a problem even to downstream players."
Some analysts, meanwhile, were optimistic on the long-term outlook for oil prices. "(Our) base case price scenario results in Brent prices reaching $85 per barrel by 2020, around $20 higher than the current 2020 futures strip of about $65 per barrel," Barclays (L:BARC) said in a report.
"What happens to oil market balances after 2016 depends critically on three main wildcards: a slowing China's impact on oil demand, the return of Iranian oil and the rate of mature field decline."
BMI Research, part of the Fitch ratings agency, said in a note that China's crude oil imports would continue to grow over the next five years at an average annual rate of 3.2 percent.
"This will be a result of higher refinery run rates to produce gasoline and continued strategic stockpiling activity up to 2020, which will help to override macroeconomic headwinds to domestic crude demand," it said.
In the first nine months of 2015, China's crude imports rose 8.8 percent to 248.62 million tonnes.
Traders said that Brent had found some support above $49 due to the strong Chinese imports.