SINGAPORE: Oil prices dipped on Friday following slight gains in the previous session and analysts said the outlook remained weak, with production high and producers reducing operating costs to adjust to lower export revenues.
Global oil prices had firmed slightly on Thursday but not before US crude hit a near-six-year low and benchmark Brent pared gains on data showing fresh additions to record-high US oil inventories.
Benchmark Brent crude oil futures opened Friday's trading little changed at $49.15 a barrel and had slipped to $49.03 by 0433 GMT. US WTI futures were trading at $44.58 a barrel, barely changed.
The market found some support from China, where new commercial crude reserves regulations are likely to boost import demand in the short term.
Chinese refineries will be expected to store enough crude for 15 days of average throughput, the country's top economic planner said this week, forcing many commercial oil traders to import crude in the short term to meet the requirements.
Although the new criteria will only have to be met gradually over a period of one to three years, depending on the age of each facility, traders said many refiners would take the opportunity to cover their stocks soon, while prices are low.
Despite this short-term support from China, analysts said the overall market outlook remained weak as producers were keeping output high and adjusting to a lower-price environment.
"It looks increasingly difficult to see any voluntary supply cutbacks in commodity markets," ANZ bank said in a research report. "Falls in currencies and energy costs will allow many energy and bulk commodity producers to ride out this weakness."
However, oil prices have found support around current levels since the beginning of the year.
With gains above $50 a barrel for Brent unlikely in current conditions, price swings have been less pronounced since the beginning of the year.
The Volatility Index from front-month Brent crude contracts has fallen from around 65 points at the beginning of the year to just over 53 points currently, its lowest since 2009.
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