Oil Outlook Remains Weak

Oil prices edged up in early Asian trading on Tuesday following a 5 percent fall in the previous session, as high global production and a weakening economic outlook, especially in Asia, prompted analysts to warn of further falls.  Oil output by the Organization of the Petroleum Exporting Countries (OPEC) reached the highest monthly level in recent history in July, and production could rise further if Iran achieves a plan to raise output by 500,000 barrels per day (bpd) as soon as sanctions are lifted.

With U.S. production also near records, while China’s economy showed further signs of slowing, prices on Monday were pulled down to within a few dollars of the six-year lows touched at the start of the year, with Brent futures LCOc1 falling below $50 per barrel for the first time since January

Although prices edged up in early trading on Tuesday, with Brent 37 cents higher at $49.89 a barrel by 0056 GMT and U.S. crude prices up 30 cents up at $45.47 a barrel, analysts said further price falls were expected.  “Crude oil is close to the low set earlier in the year, which is now looking likely to be tested as early as this week,” ANZ bank said in a note on Tuesday.