London: Oil prices recouped some early losses on Wednesday but remained under pressure after the World Bank cut its global economic growth forecast, doing little to end a rout that saw prices touch their lowest in nearly six years in the previous session.
Crude prices turned positive in the early afternoon, but failed to stage a significant rally as a weaker outlook from the Washington-based financial institution reinforced worries about sluggish growth in energy demand.
"This is just a little bounce after the very steep falls we`ve seen recently," said Christopher Bellew, a trader with Jefferies Bache. "We`ll be rangebound for a while before it goes down again."
February Brent crude gained 20 cents to trade at $46.79 a barrel by 1510 GMT, while West Texas Intermediate crude for February rose by 65 cents to $46.54.
While the market is watching for an inventory report from the U.S. Energy Information Administration at 1530 GMT, Bellew said the impact of the figures has fallen as the United States curtailed its crude imports amid the shale oil boom.
"The two things that could check the speed of the decline are storage and whether China is building strategic reserves," Bellew said.
Oil prices that have fallen by about 60 percent since June are wreaking havoc on economies that depend on commodities. Russian Finance Minister Anton Siluanov called for a 10 percent spending cut on everything but defence on Wednesday.
At the same time, Europe is on shaky ground despite the European Central Bank`s bond-buying stimulus plan.
"The global economy is running on a single engine ... the American one," the World Bank`s chief economist, Kaushik Basu, said. "This does not make for a rosy outlook for the world."
FORECASTS CUT
Analysts said prices would remain weak as a result of oversupply, prompting cuts to price forecasts for 2015 and 2016.
Oil had tumbled nearly 5 percent on Tuesday before closing down 1.8 percent, with global benchmark Brent briefly trading at par with U.S. prices for the first time in three months as some traders moved to take advantage of ample U.S. storage space.
American stocks could be approaching 80 percent of capacity by the spring, according to U.S.-based PIRA Energy Group.
Commercial crude stockpiles in the U.S. rose 3.9 million barrels last week, the industry group American Petroleum Institute (API) said.
Outside the United States, some of the world`s biggest oil traders have booked supertankers to store at least 25 million barrels at sea.
"OPEC is not going to come to the rescue of the market," said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas. "The onus is on floating storage."
Producer club OPEC has shown no sign of changing strategy since it decided late last year to maintain output despite slowing Asian and European economic growth.
