Prices of oil goes up on decline of U.S. crude stock, but remains weak

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The prices of oil made back some of its losses on Thursday on strong demand in the United States, but analysts have warned that oversupply would continue to drag on markets after a steep fall in the previous session.

Futures contracts for the international benchmark for oil prices, Brent crude, traded up 0.7 percent or 34 cents, at $48.13 a barrel while futures contracts for the U.S. West Texas Intermediate went up 0.7 percent or 32 cents or 0.7 percent, at $45.45 a barrel.

The rise reflected firm fuel demand in the United States, where data from the American Petroleum Institute on Wednesday revealed that stocks of oil in the U.S. lost around 5.8 million barrels in the week to June 30 to 503.7 million.

"Prices have managed to recover ever so slightly after API released its inventory data which showed U.S. crude inventories falling," said Sukrit Vijayakar, director of energy consultancy Trifecta.

But despite that fact market conditions still remain weak.

Prices plummeted around 4 percent on Wednesday on increasing exports by OPEC despite of its efforts to cut down production between January this year and March next year to boost prices.

"Against expectations, OECD total oil inventories are still above 3 billion barrels and the recovery in Libyan and Nigerian supplies, coupled with a fast return of U.S. shale, should prevent steep stock draws ahead," Bank of America Merrill Lynch (BAML) said, adding that output was set to rise further.

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