Oil shrugs off U.S. fuel supply increase
Oil rose on Thursday in a sign that investors are wary of pushing the market lower in response to an unexpectedly large rise in U.S. stocks of refined products that has increased concern about the demand outlook.
Brent crude futures were at $61.55 a barrel, up 33 cents by 1008 GMT.
U.S. West Texas Intermediate (WTI) crude futures were at $56.16 a barrel, up 20 cents, after having fallen nearly 3 percent on Wednesday.
U.S. crude oil inventories fell by 5.6 million barrels in the week to Dec. 1, to 448.1 million barrels, putting stocks below seasonal levels in 2015 and 2016. [API/S] [EIA/S]
But gasoline stocks rose 6.8 million barrels, to 220.9 million barrels, according to the report from the U.S. Energy Information Administration (EIA), much more than analyst expectations for a gain of 1.7 million barrels.
“We had a nice run to the downside yesterday and it seems for now that it’s ‘take your short profits soon and keep your longs for longer’,” Saxo Bank senior manager Ole Hansen said.
“We are at the time of year when liquidity tends to dry up and people are more concerned about reducing risk than adding it.”
PVM Oil Associates said in a note: “Inventories in other products were down by 5.36 million barrels on the week. The net result is a 2.52-million barrel draw in total commercial oil inventories.”
“Current levels are nearly 7 percent below last year and the surplus to the five-year average is only 3.9 percent. On balance, the weekly data was not as bad as it seems at first sight.”
But more troublingly for the bulls, U.S. oil production rose by 25,000 barrels per day (bpd) to 9.71 million bpd, the highest since monthly figures showing the United States produced more than 10 million bpd in the early 1970s.
Soaring U.S. output threatens to undermine efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to bring production and demand into balance following years of oversupply.
Sukrit Vijayakar, managing director of energy consultancy Trifecta said there were “darker shadows over the pace of rebalancing, if at all any is taking place.”
Source: Reuters (By Amanda Cooper; Reporting by Henning Gloystein; Editing by Tom Hogue and Jane Merriman)