Oil prices rose on Wednesday as U.S. crude stocks dipped, while Japan posted rising machinery orders, lending the market support amid an ongoing supply glut that could see the market run out of onshore crude storage sites in the first quarter of 2016. U.S. West Texas Intermediate (WTI) crude futures were at $38.24 per barrel at 0600 GMT, up 73 cents from their last settlement. Internationally traded Brent futures were up 58 cents at $40.84 a barrel. The firmer WTI prices were a result of a surprise 1.9-million-barrel fall in U.S. crude inventories to 488 million barrels last week. The drop, as estimated by industry group the American Petroleum Institute, compared with analysts' expectations for an increase of 252,000 barrels. Official figures from the U.S. Energy Information Administration (EIA) are due on Wednesday at 10:30 EST. Traders said the recovery in Brent was largely a result of short covering, the surprise lift in Japanese machinery orders and Chinese tax reforms aimed at encouraging imports, including of energy-intensive machinery. Yet analysts said there remained plenty of bearish factors that have helped pull down global commodity prices since 2014, including the strong dollar, weakening demand, soaring supplies and the unwinding of a quantitative easing (QE) premium, with the U.S. Federal Reserve expected to hike interest rates soon. "A CRB index hovering around 13-year lows and oil prices close to seven-year troughs suggest that commodity producers in general are doing it tough," ANZ bank said, referring to the Thomson Reuters Core Commodity CRB Index falling below 178 points for the first time since 2003. In oil, a ballooning glut is seen at 0.5 million to 2 million barrels of crude a day in excess of demand, while prices are down by almost two-thirds since 2014. Most analysts say they do not see prices rising much until late 2016 at the earliest. "Brent crude prices will continue to struggle due to a large global commercial oil stock surplus, which PIRA estimates will total 500 million barrels above normal levels by end-2015," PIRA Energy said, adding that it expects onshore crude oil storage to run out in the first quarter of 2016. Rating agency Fitch said it forecasts Brent to average $55 per barrel next year and $65 per barrel in 2017. While producers suffer from low prices, consumers benefit. "Price falls represent a windfall to consumers and downstream users. The close to 30 percent fall in oil prices since the start of the year presents a major deflationary impulse," ANZ said.
