Oil prices move up slightly, but big recovery unlikely

Crude prices rose today Thursday to recoup some of their big losses from the previous session, but gains are likely to be limited by mounting concerns that the global glut in oil is not going away, after two major agencies issued bearish reports.

Brent crude was up 44 cents at $46.70 a barrel at 0250 GMT. US crude rose 43 cents to $45.18 a barrel.

A bearish assessment on the oil market from the International Energy Agency (IEA) on Wednesday sent both benchmarks down more than 4 per cent by the close of trading.

The glut in the global oil market is persistent and is putting a lid on crude prices despite strong demand growth and steep declines in non-OPEC production, the IEA said.

"We know that the process of rebalancing is taking place now, but there is still an overhang in oil and this will time," said Avtar Sandu, senior commodities manager at Phillip Futures in Singapore.

"The market had moved up to $50 quite fast, so we might go down and see whether there is anything below $40," he said.

Surging crude stocks have pushed floating storage to seven-year highs, the IEA said.

Crude stockpiles in the United States were down less than expected last week, while distillate inventories rose the most since January and gasoline stocks unexpectedly increased, the Energy Information Administration (EIA) said on Wednesday.

The data portrayed a traditionally busy summer driving season beset with unusually weak demand, when many had expected record driving trips amid lower oil prices.

The EIA said crude inventories fell 2.5 million barrels last week, less than the 3 million-barrel drop forecast in a Reuters poll.