SINGAPORE (Reuters) – Oil sprawled about $ 1 a barrel on Wednesday to complain back some of the previous day's 6 percent dump, promised by a report of an unexpected decline in US commercial commodity stocks and detecting Indian crude imports.
Oil pump holes are being seen next to a strawberry field in Oxnard, California, February 24, 201[ads1]5. REUTERS / Lucy Nicholson
But investors remain on edge, with the International Energy Agency (IEA) warning of unprecedented insecurity of oil markets due to a difficult economic environment and political risk.
International Brent Crude Oil Futures LCOc1 was $ 63.60 per barrel at 0516 GMT, up $ 1.07 per barrel, or 1.7 percent from their last close.
US West Texas Intermediate (WTI) crude futures CLc1, up $ 1.03 cents, or 1.9 percent, to $ 54.46 per barrel. Wednesday's rebound came after a report from the American Petroleum Institute late Tuesday that US commercial raw material stocks fell unexpectedly by 1.5 million barrels a week, to 439.2 million a week to 16 November.
Registering raw imports of India by almost 5 million barrels per day (BPD) also supported prices, traders said.
Even so, Wednesday's leap was small to reverse the general market weight, which is so rough in terms of more than 6 percent the previous season among a selloff in global stock markets.
"The global economy continues through a very difficult time and is very fragile," said the IEA leader Fatih Birol on Tuesday.
U.S .. Investment Bank Goldman Sachs said Wednesday that the renewed price collapse reflected "concerns about excess supply in 2019 … (and) a broader cross-product and cross-sectoral settlement that growth problems continue to mount."
With output rising and demand outlook worsened, the organization of the petroleum exporting countries (OPEC) is pushing for a supply cut between 1 million and 1.4 million bpd to prevent a recurrence of 2014 gluten.
"We anticipate further weaknesses in the OPEC + reaction (December 6) and the G20 summit is clearer (30 November / December 1)," said Ashley Kelty, oil analyst at the Cantor Fitzgerald Europe Investment Bank.
(GRAPHIC: Brent Crude Oil Curve Fills Into Kontango – Tmsnr.rs/2R1kFDa)
Despite an expectation of OPEC joint cuts, Brent and WTI prices have fallen by 28 and 30 percent respectively since early October, and the entire structure of the terminkur curve has changed.
The Brent forward curve <0#LCO:> was in a steep withdrawal in October, which meant a tight market with spot delivery prices higher than for subsequent shipment. This makes it unattractive to store oil.
Since then, the basket has moved into contango for most of 2019, which means overuse as higher prices further out makes it attractive to save oil for later sales.
"A price increase will … require the Brent forward curve to return to the sudden and significant flattering," Goldman said.
James Mick, energy portfolio manager with US investment firm Tortoise, said that "some of the supply problem has increased US production."
U.S. Crude oil production C-OUT-T-EIA has jumped by almost a quarter of this year to a record of 11.7 million bpd, mainly due to an increase in slate production.
(GRAPHIC: Oil price decline is led by American raw materials – tmsnrtrsrsPHPHPCpL)
Reporting by Henning Gloystein; Editing Joseph Radford and Richard Pullin