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World|business|January 21, 2015 / 05:10 PM
Oil inches above $48, outlook remains weak

AKIPRESS.COM - oil-1 Oil edged above $48 a barrel on Wednesday, consolidating after a drop in the previous session, although traders and analysts said oversupply and the prospect of inventory rises made further weakness likely, according to Reuters.

Prices fell by up to 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and OPEC member Iran hinted at further price weakness, saying its oil industry could withstand $25 oil.

Brent LCOc1 rose 61 cents to $48.60 a barrel at 0959 GMT. It hit $45.19, its lowest since March 2009, on Jan. 13. U.S. crude CLc1 added 41 cents to $46.88.

"The market is consolidating between $45 and $50 and will at some point break to the downside," said Christopher Bellew, a senior oil broker at Jefferies in London, referring to Brent.

"It's not going to be until the second half of the year until we see evidence of production being cut by these low prices."

In a strategy shift, the Organization of the Petroleum Exporting Countries decided last year against cutting its supply and is betting the drop in prices will curb the growth of more costly-to-produce competing sources, such as U.S. shale oil.

The price collapse is starting to slow growth in U.S. output, according to OPEC, and prompting investment cuts. The head of France's Total said he had ordered the company to limit U.S. shale spending.

Still, OPEC's own forecasts point to a surplus in 2015, leaving an excess for inventories to absorb.

Brent fell almost 50 percent in 2014 in its biggest annual drop since 2008, pressured by weakening demand and a supply glut prompted by the U.S. shale boom and OPEC's refusal to cut output.

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