Oil prices remain under pressure

Oil prices remained under pressure due to the weak demand, although small increases reported on Tuesday.

Persistent global production has contributed to the near-record levels of oil being pumped and a lessening of demand will hurt prices further.

Futures for WTI crude gained 0.19% to $36.88 per barrel. While Brent contracts advanced 0.11% to trade at $36.66.

While the fallout of increased production has resulted in lower prices, demand has so far kept up and even outstripped the supply.

However, that appears to be under threat as JBC Energy reports demand growth in Europe turned negative for the first time in ten months in October.

This represents a loss of 170,000 barrels per day (bpd) year-on-year while the report also highlighted the slowing demand from China as it continues to transition to the 'new normal'.

Some analysts are predicting that output will exceed demand by more than 2 million bpd, and with OPEC refusing to curb production the pressure is mounting.

As many as 64% of rigs in the US have closed this year, according to data from oilfield services company Baker Hughes, but a meaningful decline in output has yet to materialize, with the remaining producers being able to drill more efficiently.

The supply glut is unlikely to be alleviated anytime soon as Iran announced they will increase exports by 500,000 bpd within weeks of Western sanctions being lifted.

Iran has the fourth largest reserves of oil in the world and fears of a return to pre-sanction output of 2.5 million bpd could put further pressure on the fragile petroleum price.

Meanwhile, Monday's Saudi Arabian budget implied that the price war with US shale is taking its toll on the economy in the kingdom, with the government planning to spend 135 billion riyals less in 2016.

The ministry of finance was prompted to give such austere projections based on the persistent and stubbornly low oil prices. This has led them to giving reduced revenue expectations while also cutting spending.