Following reports that crude stockpiles in the U.S are falling, oil prices continued to steady up during early trading on Wednesday. Market analysts, however, remained a tad cautious ahead of the release of official data later in the day, afraid prices might remain restrained well in to 2016. Whereas U.S. crude oil was trading at $41.02 on Wednesday, benchmark Brent crude for the January delivery was trading at 40 cents higher to stand at $43.97.

Data released late on Tuesday by leading industry group, the API [American Petroleum Institute], had surprised the markets thereby buttressing oil prices. The released figures showed U.S. crude stockpiles had seen a slump of up to 482,000 barrels last week. As Reuters had earlier reported, the slump was caused by higher refinery output coupled with lower imports.

Market-watchers who had, hitherto, been expecting an eighth straight week of increased U.S. stock piles were however surprised by the API report; analysts who had earlier been polled by Reuters had been forecasting a build-up of over 1.9 million barrels. At present, all eyes stay glued to the American government’s Energy Information Administration [EIA], the principal agency of the Federal Statistical System, which will be releasing official inventory statistics later on Wednesday.

Stockpiles Data Projections

Analysts will be keenly watching latest data from the EIA which is scheduled for release at 10:30 am Eastern Standard Time [15:30 London time] on Wednesday. Analysts have indicated there is a chance the data could contradict the report issued by the API. Oil prices had earlier in October been on a winning streak as soon as U.S. government data indicated a large inventory of crude stockpiles was building up. This was on the day after the API reported a draw.

From data gathered on Tuesday from Platts, a global energy and commodities information provider, information indicated that U.S. commercial crude oil stocks would be expected to show a build-up of up to 1.1 million barrels for the week ended Friday 13. This figure is according to a survey conducted by market analysts earlier on Monday.

Oil prices had seen support as the week begun even amid rising market tensions in the wake of the Paris terrorist attacks last Friday in addition to an expected disruption of supply within the conflict-ridden but oil-rich Middle Eastern bloc. As analysis from Platts showed” Oil stockpiles are very likely to have grown in the past week owing to a surge in Iraqi imports as well as widening contango [industry jargon for a situation in which the expected spot price of a commodity is lower than the future price], which has offset the impact greater refinery demand would ordinarily have”.

Despite growing demand, oil prices still remain a long way below the high of $114 per barrel last seen in June of 2014, as supply continually lags thereby contributing to a build-up in global stockpiles. Major oil producers have not helped oil prices either, with those belonging to OPEC [the Oil Petroleum Exporting Countries] nations like Saudi Arabia resolving to maintain record production levels in a bid to stave off rival shale oil producers from the U.S.

Prices Remain Under Pressure

Market analysts believe oil prices will remain under pressure heading into 2016 regardless of what the latest U.S. government data indicates on Wednesday,

“We find it difficult to believe we’ll be seeing a pick-up in oil prices in the short term, “said Steve Brice, Standard Chartered Wealth Management’s chief investment strategist on Wednesday. He went on to add, “With Saudi Arabia taking the actions it has taken, we’ll obviously be seeing excess supplies of around a million barrels per day, but very scant signs of that supply being taken off. We may be seeing some of it taken off in the U.S. but it’s evidently not sufficient to help oil prices at all, in our belief.” Brice also believes the balance of demand and supply might be reinstated later in 2016, but only as a short-term measure, “oil prices are at the least capped levels and may very well go lower.”