Oil prices edge up amid ongoing commodity downturn

* Dip in dollar, strong China imports lend some support
* Oversupply remains in place in oil and other commodities
* Reuters commodity index at lowest level since 2003

By Henning Gloystein
SINGAPORE, Dec 9 (Reuters) - Crude prices found at least
temporary support early on Wednesday after the dollar weakened
and China's commodity imports came out surprisingly strong, but
oversupply means prices are expected to remain low for some
time.
U.S. crude futures CLc1 were at $38.11 per barrel at 0048
GMT, up 60 cents from their last settlement.
Traders said the recovery on Wednesday was largely a result
of short covering, a dip in the dollar which makes oil more
expensive for importers using other currencies domestically, and
strong Chinese oil imports as the government takes advantage of
cheap oil to build up its strategic reserves.
Analysts said there was a plethora of factors, including the
strong dollar, weakening global demand, soaring supplies as well
as the unwinding of the quantitative easing (QE) premium with
the U.S. Federal Reserve expected to hike rates soon.
"Whatever the case, a CRB index hovering around 13-year lows
and oil prices close to seven year troughs suggest that
commodity producers in general are doing it tough," ANZ bank
said, referring to the Thomson Reuters Core Commodity CRB Index
.TRJCRBTR falling below 178 points for the first time since
2003.
In oil, a ballooning glut is seen between 0.5-2 million
barrels of crude a day in excess of demand, prices are down by
almost two-thirds since 2014, and most analysts say they do not
see prices rising much until late 2016 at the earliest.
"Low oil prices will continue to weigh on the sovereign
credit profiles of major exporters in 2016," rating agency Fitch
said. Fitch forecasts Brent to average $55 per barrel next year
and $65 per barrel in 2017.
"The impact of the price falls from mid-2014 and changes to
our oil price assumptions have been a key driver of sovereign
rating actions," Fitch said, adding that it had downgraded
several oil producing countries and also put the world's biggest
oil exporter, Saudi Arabia, on negative outlook.
While producers suffer from low prices, consumers stand to
benefit.
"Price falls represent a windfall to consumers and
downstream users. The close to 30 percent fall in oil prices
since the start of the year presents a major deflationary
impulse," ANZ said.

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CHART-Thomson Reuters CRB Commodity Index at 2003 levels: http://tmsnrt.rs/1OgQrCM
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(Editing by Michael Perry)