Oil struggles to find jogging after 7 percent slump, sentiment stays weak

SINGAPORE (Reuters) – Oil markets struggled to find their footing on Wednesday after plunging by 7 percent with the previous session, with a surging supply and the specter of faltering demand.

U.S. West Texas Intermediate (WTI) crude oil futures were at $ 55.54 per barrel at 0159 GMT, down 15 cents from their last settlement.

International benchmark Brent crude oil futures LCOc1 were up 4 cents at $ 65.51 per barrel.

Markets fell by more than 7 percent the previous day. Crude oil has lost a quarter of its value since early October 2014.

The slump in the face of the world.

In the past, the size of the market was significantly higher than that of the market, and it was unattractive to put oil into storage.

By mid-November, the curve had flipped into contango, when crude is cheaper than those for later dispatch. That implies an oversupplied market to make it attractive.

Oil markets are being pressured from two sides:

U.S. crude oil output from its seven major shale basins is expected to hit a record of 7.94 million barrels per day in December, the US Department of Energy's Energy Information Administration (EIA) said on Tuesday.

That surge in onshore output has helped U.S. crude production C-OUT-T-EIA hit a record 11.6 million bpd, making the United States the world's biggest oil producer ahead of Russia and Saudi Arabia.

Most analysts expect U.S. output to climb above 12 million bpd within the first half of 2019.

"This will be worth $ 85 per barrel (for oil prices)," said Jon Andersson, head of commodities at Vontobel Asset Management.

The surge in U.S. production is contributing to rising stockpiles.

U.S. crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million as refineries cut output, data from the US Petroleum Institute showed on Tuesday.

The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) has been watching the competition.

OPEC has made frequent frequent public statements that it would start withholding crude in 2019 to tighten supply and prop up prices.

"OPEC and Russia are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on Dec. 6," said Andersson.

That puts OPEC on a collision course with U.S. President Donald Trump, who has been called OPEC not to cut production.