* OPEC-member Venezuela lobbies for producer meeting to cut output
* But record US oil inventories likely to cap gains in prices
* Record storage pulls US crude into steeper Brent discount
* Morgan Stanley cuts 2016 Brent forecast to $30/b, 2017 to $40/b
Crude oil futures extended gains from the previous session on Thursday as a weaker dollar and unconfirmed talk of producers potentially meeting to discuss output cuts lifted the market despite record US stocks due to overproduction.
Despite the rise, analysts said prices would remain low in 2016 and 2017 as global demand slows and inventories swell.
US crude futures were trading at $32.46 per barrel at 0456 GMT on Thursday, up 18 cents from the previous session's close when they rallied 8 percent from below $30 per barrel.
Brent crude was up 12 cents at $35.16 per barrel.
Analysts said prices had recovered on a sliding dollar and from ongoing, yet unconfirmed, talk of a potential meeting of oil producers to cut output in support of prices, which have fallen around 70 percent since mid-2014.
But the main feature of recent oil trading has been volatility, with price swings of more than 10 percent within two trading sessions frequently occurring since mid-January.
‘The weaker US dollar provided some interim support to the commodity complex, but volatility in crude oil remains extreme. Climbing US crude stocks remain an ongoing threat to further price weakness,’ ANZ bank said.
US crude inventories climbed 7.8 million barrels in the week to Jan. 29 to 502.7 million barrels, compared with analyst expectations for an increase of 4.8 million barrels. US gasoline inventories rose to a record high of 254.4 million barrels.
Analysts remain largely bearish in their outlook, pointing towards persistent oversupply and slowing demand.
Morgan Stanley on Thursday lowered its average 2016 Brent price forecast to $30 per barrel, down from $49 previously. The bank only expects an average price of $40 per barrel in 2017 as oversupply persists.
‘With demand slowing, rebalancing may not occur until mid-2017 or later,’ it said, adding that ‘global supply should grow in 2016 despite low prices.’
Morgan Stanley also said that an emerging willingness of producers to forward hedge at prices not much above $40 per barrel was also capping prices.
National Australia Bank (NAB) said on Thursday that it expected ‘oil prices to recover mildly to $40 per barrel by end-2016 and $50 per barrel by end-17.’
ANZ bank said it saw ‘oil and iron ore markets as the commodities most susceptible to further weakness.’