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Oil traded near $56 a barrel after snapping a record losing streak as traders assessed signs of rising US crude inventories against the prospect of OPEC and allies cutting output.
Futures in New York fell were little changed after recovering slightly on Wednesday from a 17.6% slide over the previous 12 sessions. An industry report was said to show US stockpiles rose 8.8 million barrels last week, more than double the increase forecast in a Bloomberg survey before government data due on Thursday. OPEC and its partners, meanwhile, are said to be considering a bigger-than-anticipated cut in production.
Oil’s tumbled more than 26% from a four-year high in October, hit by a US move to allow some Iranian oil shipments to continue even after the imposition of sanctions on the Persian Gulf state, as well as rising American inventories and record output. Now, investors are assessing if the Organization of Petroleum Exporting Countries and its allies will curb production despite President Donald Trump’s criticism of the plan.
“The rebound in prices yesterday was weak as President Trump could criticize OPEC again when oil approaches $60, and that may force the group to weaken its production cuts again,” Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp said by phone from Tokyo. America’s increasing inventories suggests “the nation’s crude exports could become more active, resulting in excess global supplies.”
West Texas Intermediate for December delivery traded at $56.23 a barrel on the New York Mercantile Exchange, down 2 cents, at 16:41 in Tokyo. Prices rose 56 cents to $56.25 on Wednesday following the biggest one-day drop in more than three years in the previous session. Total volume traded on Thursday was about 23% higher than the 100-day average.
Brent for January settlement fell 24 cents to $66.36 a barrel on the London-based ICE Futures Europe exchange. The contract gained 65 cents to $66.12 on Wednesday. The global benchmark crude was at a $9.88 premium to WTI for the same month.
OPEC and allies are considering cutting production by more than the 1 million barrels a day Saudi Arabia proposed earlier this week, people familiar with the matter said. The talks are preliminary, and the size of the final cut will largely depend on the starting point they use, said one of the people. Depending on the final baseline, the reduction could be in the range of 1 million to 1.5 million barrels a day, one of the delegates said.
As prices slumped into a bear market, a committee of OPEC and allies including Russia on Sunday said they may need “new strategies,” signaling curbs may be on the horizon. Saudi Arabia said on Monday producers need to cut 1 million barrels a day from October levels.
In the US, if the stockpile gain reported by the American Petroleum Institute is confirmed by Energy Information Administration data, that will mark the eighth straight week of increases. Analysts predict a rise of 3.2 million barrels, according to a Bloomberg survey.
An International Energy Agency report that pointed to rising global inventories also added to oversupply concerns. Stockpiles in industrialized nations have increased for four consecutive months and are set to jump by 2 million barrels a day next half if current output is maintained, the agency said.
Other oil-market news: OPEC and allied oil producers will cut or adjust production as needed to balance the market, the group’s president, United Arab Emirates Energy Minister Suhail Al Mazrouei, said on Wednesday.
Once the oil industry’s star product, gasoline is now losing oil refineries money in Europe and has plunged in value against diesel, its main competitor. Canada’s oil sector is divided over whether to force a temporary cut to production, with some major producers pushing the controversial idea in a bid to ease a supply glut and halt a steep plunge in prices, according to people familiar with the matter.
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