Brent edges up toward $65, but Saudi stance on output curbs gains

By Adam Rose

BEIJING (Reuters) - Brent crude ticked higher on Thursday but remained below $65 per barrel, not far from a five-year low hit in the previous session, with the market's bearish tone largely intact.

Comments by the Saudi Arabian oil minister shrugging off an output cut on Wednesday renewed worries of a global glut that has slashed oil prices by more than 40 percent since June.

Brent crude edged up 18 cents to $64.42 by 0735 GMT, almost a dollar away from the previous session's low of $63.56 - the weakest since July 2009. Brent closed down almost 4 percent on Wednesday.

"This is a bit of a return to a more normal pattern of trading for us in this time zone," said Michael McCarthy, chief market strategist for CMC Markets in Sydney. "Often we reverse the overnight moves as the shorter-term trading interests take a profitable cut out of their positions."

Sentiment was also aided by a slightly weaker dollar.

U.S. crude rose 29 cents to $61.23, after sharp losses of nearly 5 percent in the previous session, its biggest daily drop in almost two weeks. It also hit a near 5-1/2 year low, of $60.43, on Wednesday.

But gains in U.S. oil prices were capped as data from the Energy Information Administration showed crude inventories in the country rose unexpectedly. Crude stocks rose by 1.5 million barrels in the week to Dec. 5, compared with analysts' expectations for a 2.2-million-barrel draw.

Traders are now eyeing an increasingly competitive battle for market share among OPEC exporters, for clues on when and at what price they would step in to help balance oil markets.

Leading the challenge is Kuwait, which has set the official selling price for its crude sales to Asian buyers for January at $3.95 a barrel below the average of Oman/Dubai quotes, a trader said, the lowest it has been since December 2008.

Global demand for OPEC crude in 2015 is expected to fall to its lowest in more than a decade and far below current output, the group said, indicating a hefty supply surplus without OPEC output cuts or a slowdown in the U.S. shale boom.

ANZ slashed its forecast for oil prices in 2015 by more than 20 percent on Thursday, predicting an average price of $71 for Brent and of $68 for West Texas Intermediate.

"Some supply discipline should kick-in during the second half of 2015, but not enough to significantly reduce swollen inventories built earlier in 2014," Natalie Rampono and Mark Pervan of ANZ said in a note.

(Editing by Clarence Fernandez, Himani Sarkar and Anupama Dwivedi)