Oil rebounded from the previous session’s loss, though the outlook remained clouded by rising U.S. stockpiles and concern that OPEC and its allies aren’t taking enough action to balance the market.
Futures added 0.6% to trade near $59 a barrel. American gasoline inventories surged the most since January as demand slumped to a three-year low, and crude stockpiles unexpectedly increased, according to the U.S. Energy Information Administration. Deeper production cutbacks announced by OPEC and its partners last week won’t prevent a surplus in early 2020, the International Energy Agency said.
U.S. crude inventories have swelled above their five-year average as surging shale output drives nationwide production to record levels. Focus now shifts to trade ahead of a Sunday deadline for the imposition of U.S. tariffs on Chinese goods. Last week, the 24 producers in the OPEC+ coalition — led by Saudi Arabia and Russia — agreed a package of cutbacks amounting to 2.1 million barrels a day.
“A week ago, OPEC surprised with less oil than expected,” said Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland. “A week later the DOE counters with more oil than expected.”
West Texas Intermediate for January delivery rose 35 cents to $59.11 a barrel on the New York Mercantile Exchange as of 11:02 a.m. London time. The contract lost 48 cents to close at $58.76 on Wednesday, slipping from the highest level since Sept. 17.
Brent for February settlement rose 58 cents, or 0.9%, to $64.30 a barrel on the London-based ICE Futures Europe Exchange. The contract fell 1% to close at $63.72 on Wednesday. The global benchmark crude traded at a $5.30 premium to WTI for the same month.
U.S. crude stockpiles unexpectedly increased by 822,000 barrels last week, climbing for sixth time in seven weeks, the EIA said. Gasoline inventories expanded by 5.4 million barrels last week, more than double the median estimate in a Bloomberg survey before the EIA data. Petroleum products supplied, an indicator of demand, dropped to 18.4 million barrels a day, the lowest level since December 2016.
