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Crude Oil Trade News : Oil prices drop as market torn between bulls and bears

Oil prices drop as market torn between bulls and bears

 Crude oil prices fell on Tuesday as traders took profit following a 3-4 percent upward swing in the previous session as conflicting market signals continued to tear at prices.

Oil markets have seesawed since the beginning of the week, torn between data that points towards prices bottoming out after a more than 50 percent fall over the last year and a global glut that bearish analysts say will lead to further losses.

Traders also focused on the soon-to-expire front-month contract in the West Texas Intermediate (WTI), which serves as the U.S. benchmark. WTI's October contract will go off the NYMEX board after Tuesday's settlement, and November will move up as the front-month.

U.S. West Texas Intermediate (WTI) crude futures were trading at $46.11 per barrel at 0447 GMT, down 57 cents from their last settlement. Globally traded Brent futures were at $48.40 per barrel, down 52 cents.

The dip in prices came after oil rallied on Monday, with U.S crude surging nearly 5 percent on signs of declining stockpiles and a fall in drilling activity, which implies lower future oil production.

A Reuters poll on Monday also forecast that U.S. crude inventories as a whole fell by 2.1 million barrels last week.

In another indicator that prices may have bottomed, hedge funds continued to pare short positions in U.S. crude oil last week, a sign they no longer believe in further price falls.

On the demand side, China's implied oil demand rose 10.2 percent from a year earlier to 10.75 million barrels per day (bpd) in August, Reuters calculations using official data showed on Tuesday. August demand was also up 1.2 percent from July's 10.62 million bpd.

Yet many analysts say oil prices still have space to fall, with several banks including Goldman Sachs and ANZ revising their price forecasts downward this month. They argue that it will take until at least 2016 or 2017 to remove a huge overhang that has been built up over the last year by soaring production just as demand slows.

"We think that WTI will trade down to below US$40/bbl over the next six months, before supply-side constraints start to be felt," ANZ bank said in its latest forecast revision.