Brent edged up on Tuesday, holding above $85 a barrel as robust China oil demand supported prices, although gains were capped by oversupply and lingering fears of a weak global economy. Implied oil demand at the world's largest energy consumer jumped 6.2 per cent in September from August to 10.3 million barrels per day, the highest since February, as crude throughput and imports reached their second-highest level this year amid a continued stockbuild. Front-month Brent rose 24 cents to $85.64 at 0651 GMT, remaining entrenched at below $100 since early September. US crude for November delivery gained 3 cents to $82.74, after ending nearly flat at $82.71 on Monday. "With higher industrial production, we may see an increase in crude demand coming from China moving forward," analysts at Phillips Futures in Singapore said in a note. China's factory output beat expectations and rose eight per cent in September from a year ago. "This likely gives some upward push to crude prices but global crude demand should still remain weak and is likely to persist in the coming quarter."
Citi cut its price forecasts for Brent and US crudes to $92 and $83, respectively, for the fourth quarter of this year.
This follows downward revisions by BNP Paribas and Bank of America Merrill Lynch last week.
"Any price movements should be limited," said Tetsu Emori, a commodity fund manager at Astmax Investments in Tokyo.
"We should probably look at the bigger picture of how Opec would react in their next meeting."
Some members of the Organization of the Petroleum Exporting Countries have indicated that the group was unlikely to ease the oil supply glut by cutting output ahead of its November 27 meeting.
Others are preparing 2015 budgets with lower oil prices.
While Libya supports an output cut, other African members seemed less keen.
The oil price slump could also affect US shale production.
About a third of the production would be uneconomical at oil prices below $80 a barrel, analysts at Bernstein Research said.
