Oil bounces back after tumble on buildup in U.S. gasoline stocks

By Meeyoung Cho

SEOUL (Reuters) - Oil prices bounced back on bargain hunting on Thursday after sharp falls overnight on an unexpectedly large buildup in U.S. gasoline stocks and seasonally tepid demand.

The global benchmark November Brent contract climbed 27 cents to $48.02 a barrel by 0639 GMT, after ending the previous session down $1.33 at $47.75 a barrel.

U.S. crude rose 31 cents to $44.79 a barrel, having slumped $1.88 on Wednesday to settle at $44.48.

"A combination of a slightly better supply-side scenario in terms of prices and a bit of an improvement in industrial sentiment globally has brought in some support," said Michael McCarthy, chief market strategist at CMC Markets in Australia.

Data from the Energy Information Administration on Wednesday also showed that U.S. crude oil stocks fell 1.9 million barrels in the week to Sept. 18, the second straight weekly drawdown. Analysts had expected a draw of 533,000 barrels.

While noting the stock draw, Energy Aspects said: "But imports are likely to jump in the coming weeks as a narrower WTI-Brent spread incentivises waterborne barrels."

It added a 462,000-barrel fall in the crude stocks of Cushing, a delivery hub for U.S. crude futures, indicated "the pace of stock draws is likely to ease as autumn maintenance kicks in."

Gasoline stocks, meanwhile, rose 1.4 million barrels, compared with analyst expectations in a Reuters poll for an 819,000-barrel gain.

The build in motor fuel in the world's largest oil consumer after the end of its summer driving season raised new concerns about high product stocks during autumn months.

And longer-term, many analysts still see a continuing supply surplus weighing on the market.

"Despite early signs of a cutback in U.S. shale production, the underlying supply and demand fundamentals remain weak for both Brent and WTI. This, alongside uncertainties surrounding China and the broader health of the global economy, is capping any recovery in prices," said BMI Research, part of the Fitch ratings agency.

BMI added that it was holding to below-consensus forecasts for both key crude benchmarks for the next two years.

"Major supply additions in West Africa, North America, the North Sea and the Middle East will continue to outpace the growth in demand, contributing to a rising overhang of crude in the market," BMI said.

A planned shutdown of Britain's North Sea Buzzard oilfield, has been reset to November from October, its operator Nexen said, contributing to a more immediate outlook for ample supplies. The field is the biggest contributor to the Forties oil stream, which has the largest volume of the four North Sea crudes used in the Brent benchmark.

(Reporting by Meeyoung Cho; Editing by Tom Hogue and Subhranshu Sahu)