Oil prices climbed back above $63 a barrel on Wednesday after the previous session’s steep drop, with a surprise fall in U.S. crude inventories giving the market a brief lift.
Brent crude rose 66 cents to $63.19 a barrel at 1410 GMT, after touching $63.96. U.S. crude gained $1.14 to $54.57. The rebound followed a report from the American Petroleum Institute (API) that U.S. crude stocks fell by 1.5 million barrels last week.
Analyst Olivier Jakob of Petromatrix said the market was due for some recovery after the prior day’s move. “The move yesterday was extremely sharp; after such moves you expect to have some rebound,” he said. “The API reported a stock draw - it is not a big one but at least it’s not a 10-million-barrel build.”
Even with the bounce, the broader picture remained weak. Crude had fallen more than 6 percent in the previous session, while global equities also dropped as investors worried about the outlook for economic growth. Brent was still down more than 25 percent from its four-year high of $86.74 reached on Oct. 3.
The decline reflected concern over slowing demand in 2019 and record output from Saudi Arabia, Russia and the United States. Those pressures have pushed the Organization of the Petroleum Exporting Countries into talks about trimming production again after earlier increases.
OPEC, Russia and other non-OPEC producers are weighing a cut of between 1 million barrels per day (bpd) and 1.4 million bpd at a Dec. 6 meeting, according to sources familiar with the matter. But analysts say Saudi Arabia may face difficulty backing a cut because of pressure from Washington to keep prices low.
President Donald Trump on Wednesday praised Saudi Arabia for helping to lower oil prices. On Tuesday, he said he would remain a “steadfast partner” of Saudi Arabia even as he said Crown Prince Mohammed bin Salman may have known about a plan to murder journalist Jamal Khashoggi.
Jakob said that political backdrop makes a supply cut harder to expect. “It is more difficult to expect a supply cut when you have the U.S. president giving full support to Saudi Arabia and asking Saudi to maintain low prices,” he said.
JBC Energy said Trump’s remarks “highlights the potential for political fallout for Saudi itself from a hefty cut in production”.
The Reuters image used with the original report showed oil pump jacks beside a strawberry field in Oxnard, California, on February 24, 2015.
Additional reporting by Henning Gloystein; Editing by Jason Neely and Edmund Blair.
Context ¶
The market reaction came as traders balanced a temporary inventory draw against wider fears of oversupply and weaker demand. The report also captured the political pressure surrounding Saudi Arabia ahead of the Dec. 6 producer meeting.
Preserved required years ¶
- 2015: Reuters image caption date for the Oxnard, California oil pump jacks photo.
- 2019: Mentioned in the market outlook as the year for slowing demand forecasts.
