Oil dips on glut concerns, but strong China imports support

Oil dipped on Thursday on persistent worries about oversupply, but strong Chinese imports and signs that U.S. storage tanks are gradually being drained offered some support to prices.

Brent crude futures were at $47.70 per barrel at 0657 GMT, down 4 cents from their last close.

West Texas Intermediate (WTI) crude futures were down 3 cents at $45.46 per barrel.

The dips came after the International Energy Agency`s chief economist, Laszlo Varro, said that oil markets were still oversupplied.

"There is no doubt in the short term the market is oversupplied," Varro told Reuters on Thursday in Tokyo, adding that this was in part due to rising output from Kazakhstan`s giant Kashagan oil field.

Also, the Organization of the Petroleum Exporting Countries (OPEC) said late on Wednesday that the world would need 32.20 million bpd of crude from its members next year, down 60,000 bpd from this year, as consumers have increasing choices of supply from outside OPEC.

Meanwhile, OPEC said its output rose by 393,000 bpd in June to 32.611 million bpd. The gain was led by Nigeria and Libya.

That came despite a pledge by OPEC to curb production by about 1.2 million bpd between January this year and March 2018, while Russia and other non-OPEC producers say they will hold back half as much.

Despite the ongoing supply overhang, there are signs of a gradual reduction in the global glut.

China imported 212 million tonnes of crude oil, or 8.55 million barrels per day (bpd), in the first six months of the year, up 13.8 percent on the same period in 2016, customs data showed on Thursday, making China the world`s biggest crude importer ahead of the United States.

"We are definitely seeing robust demand growth (in China), driven by low oil prices and growth in SUVs. The very strong import growth is partly being helped by declining domestic production," said Neil Beveridge, senior oil analyst Sanford C. Bernstein.

In the United States, crude oil inventories last week dropped the most in 10 months.

Crude inventories fell 7.6 million barrels in the week to July 7, to 495.35 million barrels. The decline was the biggest since the week ended Sept. 4.

While U.S. crude inventories remain far above their five-year average, stocks have fallen 7 percent since record levels from late March.

"U.S. inventory numbers confirmed that a drawdown (of excess inventories) was in train," ANZ bank said.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)