Oil trades near $48 as U.S. stocks seen adding to global glut

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WASHINGTON. KAZINFORM - Oil traded near $48 a barrel amid speculation expanding U.S. inventories will exacerbate a global supply glut that's driven prices to the lowest in more than five years.

Futures were little changed after four days of losses in New York. Stockpiles in the world's biggest oil-consuming country probably rose by 700,000 barrels last week, a Bloomberg News survey showed before a government report today. China won't drive a rebound in oil prices this year as growth in net crude imports will slow in 2015, Citigroup Inc. strategists including Ivan Szpakowski said in research note, Bloomberg reported. Oil slumped by almost half in 2014, the most since the 2008 financial crisis, as the U.S. pumped the most crude in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to cut production. Iran has held talks with Russia to reduce output in the world's biggest crude producer, with "no conclusion reached yet," according to Iranian Oil Minister Bijan Namdar Zanganeh. "Demand continues to be weak to balance supplies," Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone today. "Demand isn't something that can be recovered in the short term while things are not looking great for China and Europe is expected to be hit harder by gloomy circumstances in Russia." West Texas Intermediate for February delivery was up 15 cents, or 0.3 percent, at $48.08 a barrel on the New York Mercantile Exchange at 10:40 a.m. Singapore time. The contract dropped $2.11 to $47.93 yesterday, the lowest settlement since April 21, 2009. The volume of all futures traded was 39 percent below to the 100-day average. U.S. Supplies Brent for February settlement was 6 cents lower at $51.04 a barrel on the London-based ICE Futures Europe exchange. Futures fell $2.01, or 3.8 percent, to $51.10 yesterday, the lowest close since April 30, 2009. The European benchmark crude traded at a premium of $2.97 to WTI. Implied volatility for at-the-money options in the front-month WTI contract increased to 60.2 percent this week, the highest level in more than three years. It was at almost 56 percent today, while Brent volatility rose to more than 48 percent, data compiled by Bloomberg show. U.S. crude inventories probably increased to 386.2 million barrels in the week ended Jan. 2, according to the Bloomberg survey before the Energy Information Administration releases its weekly report today. Slow Imports Supplies at Cushing, Oklahoma, the delivery point for WTI contracts and the biggest U.S. oil-storage hub, expanded by 482,000 barrels last week the American Petroleum Institute said, according to a Twitter posting by Dominick Chirichella. U.S. crude stockpiles slid by 4 million barrels, data from the industry group was said to show. China's net oil imports will probably rise by 3.3 percent this year, compared to 8.9 percent in 2014 as "a slower build-out of refining capacity and record commercial storage builds in 2014 are likely to limit growth in 2015," according to Citigroup. Russia's investment-grade status is being tested after the slump in oil, its main export earner, and sanctions over the conflict in Ukraine threaten the economy with a recession. The cost of insuring the country's bonds against default rose to the highest level in almost six years yesterday. Consensus among OPEC members to stop the fall in oil prices is important while an emergency meeting "won't in itself solve problems," state-run Mehr news agency cited Iran's Zanganeh as saying. Oil markets are witnessing "tensions caused by many factors, chiefly the slow growth in the global economy," Saudi Arabia's King Abdullah said in a speech read out in a broadcast by Crown Prince Salman Bin Abdulaziz. "These tensions aren't new to the oil market, and we've dealt with them in the past with a solid will, with wisdom and experience, and we will deal with the current developments in the oil markets in the same way."

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