Brent crude oil prices reversed most of their early gains to steady below $54 per barrel on Tuesday as high ongoing oversupply dragged on the market. Prices on the other side of the Atlantic fell for a sixth session to just above a six-year low, keeping their discount to Brent at near $10, a trend that analysts say could deepen.
“The oil market is currently oversupplied, driven in part by the success of North American shale,” Morgan Stanley said. While the U.S. rig count has dropped from 1,809 rigs a year ago to 1,125 last week, past cycles have shown that there is “often a lag between when drilling stops and when oil supply stops growing”, the bank said in a note.
Brent, which rose to a session high of $54.38, was trading at $53.99 by 0430 GMT. The April contract that expired in the previous session closed down $1.23 after hitting $52.50 earlier in the day, its lowest since Feb. 2.
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