Oil Steadies, Outlook Bearish

Oil steadied on Tuesday after almost a week of sharp falls, but the outlook remained weak amid oversupply and several banks cut their price forecasts.

Benchmark Brent crude was down 10 cents at $46.78 a barrel. US light crude was 5 cents lower at $44.35, CNBC reported. Signs of strong short-term demand capped losses. Gasoline demand tends to increase in the northern hemisphere summer, as US drivers take to the road.

Weekly US gasoline demand data compare favorably "to the five-year average and miles driven also continue to grow year-on-year", Bank of America Merrill Lynch said in a note to clients.

However, it also said US gasoline demand may have peaked in absolute terms last year, adding that it expected no structural tightness once the peak demand summer season was over.

Crude prices are about 18% below their 2017 opening levels despite a deal led by the Organization of Petroleum Exporting Countries to cut production from January.

OPEC, along with Russia and some other major exporters, has agreed to hold production at around 1.8 million barrels per day below levels pumped at the end of last year.

The limits will be maintained until March 2018 to drain a global glut, but production elsewhere has risen as OPEC has held back.

US oil production has jumped more than 10% over the last year to 9.34 million bpd. Nigeria and Libya, OPEC members exempt from production limits, have also increased output.

OPEC exported 25.92 million bpd in June, 450,000 bpd more than in May and 1.9 million bpd more than a year earlier, according to Thomson Reuters Oil Research.

"OPEC has yet to address this increase in production," Goldman Sachs said in a note.

Without further cuts by OPEC and other producers, Goldman said crude prices could fall below $40 per barrel.