Oil prices dipped on Thursday on worries about oversupply, but strong Chinese imports and signs that U.S. storage tanks were gradually being drained offered some support.
Brent crude fell 20 cents to $47.54 a barrel by 0730 GMT and U.S. light crude was down 15 cents at $45.34.
Oil inventories remain near record levels in many areas despite efforts to control output over the past six months and International Energy Agency Chief Economist Laszlo Varro said on Thursday that markets face a supply surplus.
“There is no doubt in the short term the market is oversupplied,” Varro told Reuters in Tokyo, adding that this was partly because of rising output from Kazakhstan’s giant Kashagan oilfield.
The Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday that the world would need only 32.2 million barrels per day (bpd) of its crude next year, down 60,000 bpd from this year and about 400,000 bpd less than it pumped in June.
OPEC said its output rose by 393,000 bpd in June to 32.611 million bpd, thanks to extra output from 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 8.55 million 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),” said Neil Beveridge, senior oil analyst at Sanford C. Bernstein, citing low oil prices and increasing demand for SUVs.
The world’s biggest oil market, in the United States, could also be tightening. U.S. crude oil inventories last week registered their biggest decline in 10 months.
Crude inventories fell by 7.6 million barrels to 495.35 million barrels in the week to July 7.
While U.S. crude inventories remain far above their five-year average, stocks have fallen 7 percent since record levels from late March.