This Reuters market report said oil prices recovered after a sharp slide in the previous session, helped by U.S. government data showing firmer demand for refined fuels. Even with the bounce, traders were still focused on swelling global crude supply and the risk of weaker demand ahead.
Brent crude futures rose $1.55 to $64.08 a barrel, while U.S. West Texas Intermediate gained $1.89 to $55.32 a barrel by 1:12 p.m. EST (1812 GMT). The move followed a drop of more than 6 percent the day before, when broader equity markets also weakened on worries about the economic outlook.
The Energy Information Administration said U.S. crude inventories increased by 4.9 million barrels in the latest week. That was the ninth straight weekly build, the longest run of increases since March 2017. At the Cushing, Oklahoma, delivery hub for WTI, stocks fell by 116,000 barrels, the first decline in nine weeks.
Product stocks moved lower. Gasoline inventories fell by 1.3 million barrels to their lowest level since December 2017, while distillate stockpiles dropped by 77,000 barrels. John Kilduff, a partner at Again Capital Management in New York, said the data were “somewhat bearish” because of the crude build, but he added that the draw in refined products and the jump in refinery activity could signal the end of a run of mostly negative reports.
Brent had already fallen more than 25 percent from its four-year high of $86.74 on Oct. 3. Traders were reacting to forecasts for slower 2019 demand and to abundant supply from Saudi Arabia, Russia and the United States. That pressure revived discussion inside the Organization of the Petroleum Exporting Countries about cutting output after months of higher production.
Sources familiar with the matter said OPEC, Russia and other non-OPEC producers were considering a reduction of between 1 million barrels per day and 1.4 million barrels per day at a Dec. 6 meeting. Analysts said Saudi Arabia may have less room to push prices higher because of U.S. pressure to keep oil cheap. On Wednesday, U.S. President Donald Trump praised Saudi Arabia for helping to lower oil prices.
Trump had also said on Tuesday that 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. Analysts said that political backdrop could make Riyadh more willing to follow Washington’s wishes.
U.S. energy firms cut three oil rigs in the week to Nov. 21, bringing the total count to 885, according to Baker Hughes, the General Electric Co energy services unit. Brian Kessens, managing director at Tortoise, said oil prices were likely to stay volatile ahead of the Dec. 6 OPEC meeting, with markets reacting to shifting rhetoric and speculation over what the group would actually do.
The Reuters report also noted that Brent had already fallen sharply from its Oct. 3 peak, underscoring how quickly sentiment had turned by late 2018. The same supply concerns would continue to shape the market into 2019, when traders were still watching for any sign that OPEC and its allies would act to prevent a deeper glut.
Photo caption: Oil pump jacks are seen next to a strawberry field in Oxnard, California, February 24, 2015. REUTERS/Lucy Nicholson.
Archive note: The source report was published in 2018, but it also references the February 24, 2015 image caption, the March 2017 inventory streak, and the 2019 demand outlook discussed by traders.
