A relief to crude oil price woes seems unlikely in the near future, as oversupply concerns continue to intensify even as improving US economic data strengthens the case for an interest rate hike by the country's central bank in September.
Data released on Wednesday showed that gasoline stocks in the US surprisingly rose while the markets had expected them to drop.
Following the report, Brent crude prices fell below $50 per barrel, as heightening oversupply worries triggered a sell-off.
"The US has (cheap) crude supply and can keep runs high but the rest of the world is not looking so good ... We remain oversupplied and world-wide inventories are high," Tony Nunan, a risk manager at Mitsubishi Corp, told Livemint.
Overall, Brent crude oil prices are down over 23% since the beginning of June amid increasing oil output by the Organization of the Petroleum Exporting (OPEC) countries and reduced demand in the world's second largest economy, China.
The OPEC continues to deny cutting its oil production amid worries of loss in market share. A sluggish economic growth in China has also raised concerns over the oil demand in the country.
Besides, the recent improvement in the US economic data has resulted in continued appreciation of the US dollar, which is a negative development for the crude oil investors.
"Economic data is hot this summer. In the past weeks a flurry of housing, auto, and labor data has been released, proving that the U.S. economy is moving in the right direction," said Voya Investment Management in a note.
Markets eagerly await the US employment data scheduled to be released on Friday. Any sign of improvement in the US labour market will increase the expectations over the US Fed rate hike in September.
"We maintain our call for September and believe that the balance of data received over the remainder of the summer will be sufficiently strong to keep the FOMC on track for a rate hike this year," said Barclays Capital.