Oil prices gained 0.4 percent in choppy trade, after a report showing a bigger-than-expected U.S. crude stock build was offset by large distillate and gasoline inventory draws.
U.S. crude stocks rose by 5 million barrels, the biggest jump since late January, the U.S. Energy Information Administration (EIA) said. Expectations had been for a 2 million barrel build. But there was a larger-than-expected draw on fuel stocks.
“We’re not pressuring the downside that much. Of course, the reason is because we had some unexpectedly large draws in distillates and gasoline that, when added together, are two times bigger than the crude build,” said Bob Yawger, director of energy futures at Mizuho.
Brent crude oil futures LCOc1 were up 25 cents, or 0.4 percent, to settle at $64.89 per barrel. U.S. West Texas Intermediate (WTI) futures CLc1 also gained 25 cents, to settle at $60.96 per barrel.
“I don’t think we have a clear set of directions, and I don’t think this (EIA) report gives that much of an insight as to whether the rebalance continues or not. We continue to just chop around here,” said Gene McGillian, manager of market research at Tradition Energy.
Prices were pressured after The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report that supply from non-members is likely to grow by 1.66 million barrels per day (bpd) in 2018, almost double the growth it predicted in November, largely due to rising U.S. supply.
OPEC also said oil inventories across the most industrialized countries rose in January for the first time in eight months, a sign the impact of its output cuts may be waning. OPEC trimmed its 2018 demand forecast for its own crude by 250,000 bpd to 32.61 million bpd, a fourth consecutive decline.
“According to the OPEC report, demand for OPEC’s oil must be 33 million barrels per day for the rest of the year to get rid of any remaining oversupply,” Commerzbank strategist Carsten Fritsch said.
Oil prices got a boost early in the session from a broader investor push into commodities after Chinese data showed industrial production in the world’s largest importer of raw materials grew more than expected over the first two months of the year.
Oil may also soon get some support from seasonal demand.
“We are now only two to four weeks away from when weekly oil inventory data will start to draw again which should be supportive for oil prices,” SEB commodities strategist Bjarne Schieldrop said.