WTI and Brent bears curious for dips eying on supply glut ahead of EIA reports but Brazil and Libya create demand

Although crude prices have surged yesterday despite the strong US dollar, bears have been keen on supply glut. We like to urge it's nothing else but demand supply equation that is hurting the price of this commodity.

In the current rather negative environment, even small bits of news are clearly enough to "justify" an upwards surge. Brent climbing above $50 per barrel again for the first time since mid-October.

This jump was sparked by unscheduled production outages, workers at the state-owned oil company Petrobras in Brazil have been on strike since Sunday.

According to the union, up to 500,000 barrels less oil per day are being produced nationwide as a result, though the company itself estimates a lower figure.

Additionally, due to the edgy security circumstances, the Libyan crude oil export terminal (Zueitina) was pressurized to shut down again, which is hampering oil exports from this North African OPEC country, which in any case is achieving only limited production.

However, even if the unscheduled outages were to increase somewhat in the short term - according to EIA estimates, they already totaled 3.7 million barrels in September, which was their highest level since 2010 - supply remains more than ample on the oil market.

This is likely to be confirmed once again by the US crude oil inventory report that is due to be published by the US Department of Energy this afternoon.

The American Petroleum Institute had already reported a 2.8 million barrel increase in US crude oil stocks yesterday. As a result the Brent price is likely to find it hard to defend the $50 per barrel mark.