by Stephanie Kelly
New York | Oil futures rose for the second consecutive session after this week’s steep losses as US fuel stockpiles declined and a possible cut in OPEC output helped support prices.
Brent crude futures rose 50 cents to settle at $US66.62 a barrel. US West Texas Intermediate (WTI) crude futures rose 21 cents to settle at $US56.46 a barrel.
On Tuesday, US futures marked their steepest one-day loss in more than three years due to ongoing worries about weakening global demand and oversupply. WTI also posted a record 12th straight decline.
US Energy Information Administration data showed crude inventories jumped 10.3 million barrels last week, the biggest weekly build since February 2017. Analysts in a Reuters poll had expected an increase of 3.2 million barrels.
But gasoline stocks fell 1.4 million barrels, while distillate stockpiles drew down by 3.6 million barrels, the EIA data showed.
While the larger-than-expected crude build was “shocking”, the drops in refined product supplies helped buoy prices, said Phil Flynn, analyst at Price Futures Group in Chicago. “The products are definitely supporting us right now.”
The Organisation of the Petroleum Exporting Countries, led by Saudi Arabia, is considering a cut of up to 1.4 million barrels per day (bpd) next year to avoid the kind of build in global inventories that prompted oil prices to crash between 2014 and 2016.
“Oil prices shrug the (EIA) data off so far,” Commerzbank commodities analyst Carsten Fritsch said. “One explanation could be that a substantial production cut by OPEC becomes more likely.”
Earlier in the day, two-high ranking Russian sources told Reuters that Russia wanted to stay out of any oil-production cuts touted by some of its partners in the OPEC-led supply pact.
The head of Libyan state oil firm NOC said in a statement on Thursday that it was important for OPEC and non-OPEC producers to cooperate to maintain oil market stability.
The International Energy Agency (IEA) and OPEC this week warned of a sizeable surplus at least in the first half of 2019, and possibly beyond, given the pace of growth in non-OPEC production and slower demand in heavy consumers such as China and India.
Oil prices have lost about a quarter of their value in only six weeks, pressured by a slowing global economy and soaring crude output led by the United States. US crude production climbed to 11.7 million bpd, the highest on record, according to EIA data on Thursday.
“Asian refiners and consumers we speak with are mentioning initial concerns of slowing demand,” said Mike Corley, president of Mercatus Energy Advisors.
US bank Morgan Stanley said on Wednesday that China’s economic “conditions deteriorated materially” in the third quarter, while analysts at Capital Economics said China’s “near-term economic outlook still remains downbeat”.
China is the world’s biggest oil importer and the second-largest crude consumer.