Hong Kong - Oil traded near $30 a barrel after the biggest two-day drop in almost seven years as US industry data showed crude stockpiles increased, exacerbating a global surplus.
Futures gained 1.4% in New York, paring a drop of 11% the previous two sessions. US crude inventories expanded by 3.8 million barrels last week, the American Petroleum Institute reported earlier.
“After a return to recent lows we expected to see some bottom-picking coming to the market,” said Olivier Jakob, managing director at consultants Petromatrix GmbH. “The price of crude oil is cheap.”
Oil has lost about 19% this year amid brimming US crude supplies and the outlook for increased exports from Iran after the removal of international sanctions. The slump continues to take its toll on oil producers, with Exxon Mobil cutting its drilling budget to a 10-year low and Chevron seeing its credit ratings cut by Standard & Poor’s for the first time in almost three decades.
West Texas Intermediate for March delivery rose 42 cents to $30.30 a barrel on the New York Mercantile Exchange early on Wednesday. The contract lost 5.5% to $29.88 on Tuesday, closing below $30 for the first time since January 21. Total volume traded was about 61% above the 100-day average. Prices fell 30% last year.
Brent for April settlement was 37 cents higher at $33.09 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $1.52 to $32.72 on Tuesday. The European benchmark crude was at a premium of $1.10 to WTI for April.
Prices may surge about 50% by the fourth quarter as US crude output declines. WTI will reach $46 a barrel in the last three months of 2016, while Brent will trade at $48 during the same period, according to the median of 17 estimates compiled by Bloomberg this year. A global surplus that fuelled oil’s decline to a 12-year low will shift to deficit as shale production falls, according to Goldman Sachs Group.
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