Supported by expected supply cuts from OPEC, oil prices were steady on Friday but were held back by record U.S. manufacture.
U.S. West Texas Intermediate (WTI) crude oil stocks were at $56.5 per barrel, up 12 cents from their last settlement.
Brent crude oil stocks were up 7 cents at $66.69 a barrel.
Costs were mainly upheld by expectations the Organization of the Petroleum Exporting Countries (OPEC) would begin withholding supply soon, dreading a renewed rout, like in 2014 when costs slammed under the heaviness of oversupply.
Nonetheless, Morgan Stanley cautioned a cut by the Middle East-dominated market cartel might not have the desired effect.
"The main oil price benchmarks - Brent and WTI - are both light-sweet crudes and reflect this glut," the U.S. bank said.
"OPEC production cuts are usually implemented by removing medium and heavier barrels from the market but that does not address the oversupply of light-sweet."
Because of the structural oversupply that has emerged in the market from record manufacture by numerous nations, Morgan Stanley said that “OPEC cuts are integrally temporary (because) all they can do is shift production from one period to another”.
Despite the fact that OPEC considers withholding supply, U.S. crude oil production reached a new record last week at 11.7 million barrels per day (bpd), according to U.S. Energy Information Administration (EIA) data published on Thursday.
U.S. output has surged by nearly a quarter since the beginning of the year.
The record output meant U.S. crude oil futures posted the largest weekly build in almost two years.
Crude inventories climbed 10.3 million barrels in the week to Nov. 9 to 442.1 million barrels, the top level since early December 2017.
This surge contributed to oil costs dropping by around a quarter since early October, taking a lot of surprise.
"Oil bulls, us included, have capitulated and we no longer see oil climbing to $95 per barrel next year," Bank of America Merrill said in a note.
Even though sentiment has turned bearish, some analysts caution that 2019 could be tighter than anticipated.
"We expect 2019 oil demand to reach 101.1 million bpd," natural resources research and investment firm Goehring & Rozencwajg said, up from just less than 100 million bpd this year.
At the same time, the firm said manufacturing outside North America was set to upset.
Including OPEC’s expected stock cuts, Goehring & Rozencwaig said “those investors who are able to take on a contrarian position … and stomach the instability … are being presented with an excellent investment opportunity” to buy into oil after the latest slump.
Bank of America agreed, saying “we believe oil is oversold and will probable bounce up from the present levels, as OPEC+ dials back manufacture in December”.