Oil pared losses after an industry report was said to show an unexpected decline in U.S. crude stockpiles.
Futures gained about 50 cents after closing at the lowest level in two weeks in New York. The American Petroleum Institute was said to have reported U.S. crude stockpiles declined 1.05 million barrels, with storage also shrinking at tanks in the key hub of Cushing, Oklahoma. The draw is coming at a time when refiners are conducting seasonal maintenance, typically lowering their demand for crude.
A crude stock draw is “very unusual for this time of year,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said by telephone. “It’s unexpected. That’s going to add a little support to the short-term bearish sentiment now.”
A Bloomberg survey ahead of government data scheduled to be released shows stored supplies probably increased by 3.15 million barrels a day.
While oil prices mimicked the movement of equities during session after a broad market selloff, the U.S. benchmark held its ground above the $60 a barrel mark. The Organization of Petroleum Exporting Countries and partners including Russia are working to reduce output, yet American shale drilling remains a persistent threat.
U.S. crude output is seen climbing above 11 million barrels a day in November, according to the Energy Information Administration’s Short-Term Energy Outlook, which also came on Tuesday. OPEC “still has a way to go” in rebalancing the market, OPEC Secretary-General Mohammad Barkindo said in an interview.
West Texas Intermediate for March delivery traded at $63.81 a barrel after settling at $63.39 a barrel on the New York Mercantile Exchange. Total volume traded was about 26 percent above the 100-day average.
Brent for April settlement slid 76 cents to end the session at $66.86 on the London-based ICE Futures Europe exchange, the lowest since early January. The global benchmark crude traded at a premium of $3.75 to April WTI.
The API report was also said to show that stockpiles at the Cushing storage hub fell by 633,000 barrels. That would be the seventh straight week of declines if the Energy Information Administration confirms it. Gasoline inventories decreased by 227,000 barrels and distillate supplies rose by 4.55 million.
U.S. stocks rebounded from a violent selloff, yet the Dow plunged more than 500 points at the open. The S&P 500 Index gained 1.7 percent as of 4 p.m. New York time, after falling as much as 2.1 percent earlier in the session.
The move in oil prices during the session was “linked to what’s going on in the broader markets,” Tamar Essner, an analyst at Nasdaq Inc. in New York, said by telephone. “Markets tend to move in lockstep. In panic situations, markets tend to move together in a coordinated way.”
Other oil-market news:
- Gasoline futures fell for a fourth day, dropping 2.2 percent to settle at $1.8052 a gallon, the lowest level since early January.
- BP Plc dodged the disappointment that afflicted other oil-company earnings by doing a better job of exploiting the upswing in crude prices.
- Iran’s armed forces, some of which are under U.S. sanctions, must divest from energy assets and other businesses to help save the Persian Gulf nation’s economy, President Hassan Rouhani said.