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Oil stages modest rebound after mixed US petroleum data
[NEW YORK] Oil prices climbed on Wednesday in a modest rebound from a sharp sell-off after a mixed US petroleum report showed an increase in crude inventories and a decline in production.
US benchmark West Texas Intermediate for October delivery rose 84 cents to US$46.25 a barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for October closed at US$50.50 a barrel, a gain of 94 cents from Tuesday's settlement.
The oil market turned sharply lower Tuesday, snapping a strong three-day rally, after weak manufacturing data from China and the United States further clouded the outlook for demand growth in the two biggest energy consumers.
Rising supplies and lackluster demand growth have spurred oil's steep decline since mid-2014, when crude fetched more than US$100 a barrel.
Traders pored Wednesday over the latest US weekly oil report from the Department of Energy (DoE). Commercial crude inventories rose by 4.7 million barrels to 455.4 million barrels in the week ending August 28, staying near eight-decade highs.
The increase was much bigger than the 900,000 barrels on average expected by experts Bloomberg News surveyed.
"The unexpectedly sharp build reminds traders about the excessive supply of the stuff in the US, which should continue to weigh on prices for the foreseeable future," said Fawad Razaqzada, an analyst at Forex.com.
US crude production, meanwhile, fell by 119,000 barrels to 9.22 million barrels a day. Gasoline inventories fell by 300,000 barrels to 214.2 million barrels.
"Oil inventories are unlikely to be reduced meaningfully in the short term because not only is the summer driving season coming to an end but there is also the usual refinery maintenance works that will take place soon, meaning weaker demand - particularly for gasoline," Mr Razaqzada said.
Commerzbank analysts highlighted the market's extreme volatility.
"The volatility index for crude oil has all but doubled in the past two weeks and reached its highest level since mid-March yesterday," they said in a research note.
"It is therefore virtually impossible to make any reliable predictions about near-term price performance at the moment - indeed such predictions hardly have even a half-life of a few hours right now."