London — Oil prices rose by more than 1% on Thursday, recovering from a near five-month low in the previous session but sentiment stayed weak due to rising U.S. supply and a stalling global economy.
Benchmark Brent crude was at $61.30 a barrel at 1152 GMT, up 67 cents or 1.1%. U.S. West Texas Intermediate crude fetched $52.05, up 37 cents or 0.7%.
On Wednesday, the two benchmarks hit their lowest levels since mid-January at $59.45 and $50.60, respectively.
Signs of slowing global economic activity have increased in recent months, fuelled by trade tensions between the United States and China, the world’s top two energy consumers.
“Ample supplies come on top of growth concerns related to the trade dispute escalation and put pressure on oil prices for the time being,” Norbert Rücker, head of economics at investment bank Julius Baer, said in a note.
Despite Thursday’s gains, oil markets are moving into “bear” territory, defined by a 20% fall from peaks reached in late April.
Oil prices rallied strongly in the first five months of the year to a high of nearly $75 a barrel, supported by supply curbs by the Organization of the Petroleum Exporting Countries and some non-OPEC producers including Russia, an alliance known as OPEC+.
U.S. sanctions limiting oil exports from Iran and Venezuela also offered support.
But surging U.S. crude production has returned to the fore as increased drilling in the prolific Permian shale basin helped push output to a record 12.4 million barrels per day (bpd) by the end of May.
U.S. commercial crude inventories also rose to their highest since July 2017.
Members of the OPEC+ group are set to discuss whether to extend their supply curbs further later this month.
President Vladimir Putin said on Thursday that Russia had differences with OPEC over what constituted a fair price for oil but said Moscow would take a joint decision with OPEC colleagues on output at a policy meeting in the coming weeks.
Weak growth is also putting pressure on the outlook for demand.
Morgan Stanley lowered its forecast for growth in oil demand for 2019 from 1.2 million bpd to 1.0 million bpd, and cut its Brent price forecast for the second half of 2019 to $65-$70 per barrel, from $75-$80.
“Demand is weakening much more rapidly than we had expected,” Morgan Stanley analysts said in a note on Wednesday.
“We now estimate 2019 to be a year in which supply and demand broadly balance,” the investment bank said.