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Oil rebounds after prior session's slide; glut worries persist
[NEW YORK] Oil prices rose about US$1 a barrel a barrel on Wednesday, bouncing from the lowest levels in months, after US government data showed strong demand for refined fuel, but concerns remained over rising global crude supply.
Brent crude futures gained 95 cents to settle at US$63.48 a barrel, up 1.52 per cent. US West Texas Intermediate (WTI) crude futures rose US$1.20 to settle at US$54.63 a barrel, a 2.25 per cent gain.
US crude stocks rose 4.9 million barrels last week, the Energy Information Administration said, a larger-than-expected increase. Crude inventories have risen for nine straight weeks, the longest streak since March 2017.
Crude stocks at the Cushing, Oklahoma, delivery hub for WTI fell 116,000 barrels, the first drop in nine weeks, EIA said.
Petrol stocks fell 1.3 million barrels to the lowest level since December 2017, while distillate stockpiles dropped by 77,000 barrels, the EIA data showed.
"Cushing posted the first decline in a couple of months, a possible portent of some leveling that could drive some support into the WTI curve," said Jim Ritterbusch, president of Ritterbusch and Associates, in a note.
The overall market remained weak after crude fell more than 6 per cent the previous session, while world equities tumbled on worries about economic prospects.
Brent has fallen by more than 25 per cent since reaching a four-year high of US$86.74 on Oct 3, reflecting forecasts of slowing demand and ample supply from Saudi Arabia, Russia and the United States.
Worried by the prospect of a new supply glut, the Organization of the Petroleum Exporting Countries is talking about reducing output just months after increasing production.
Opec, Russia and other producers are considering a supply cut of between 1 million barrels per day (bpd) and 1.4 million bpd at a Dec 6 meeting, sources familiar with the issue have said.
However, Saudi Arabia may find it harder to act to support prices, analysts said, after US President Donald Trump on Wednesday praised Saudi Arabia for helping to lower oil prices.
Riyadh could feel more inclined to heed US demands after Mr Trump promised on Tuesday to be a "steadfast partner" of Saudi Arabia despite saying Crown Prince Mohammed bin Salman may have known about a plan to murder journalist Jamal Khashoggi.
US energy firms cut three oil rigs in the week to Nov 21, bringing the total down to 885, General Electric's Baker Hughes energy services firm said on Friday.
"It's fair to say that the price of oil is going to continue to be pretty volatile between now and Dec. 6 when Opec meets," said Brian Kessens, managing director at Tortoise. "There's going to be a lot of different rhetoric and anticipation of what will actually transpire."