SINGAPORE (Reuters) – Oil rebounded more than 1% on Wednesday to recover part of the 6% dip the previous day, boosted by a report of an unexpected drop in US trade inventories and imports of Indian crude oil.
Oil pump jacks are seen next to a strawberry field in Oxnard, California, on February 24, 2015. REUTERS / Lucy Nicholson
But investors have kept pace with the International Energy Agency (IEA) alert for unprecedented uncertainty in oil markets due to a difficult economic environment and a risk politic.
International futures on Brent LCOc1 crude oil were at $ 63.39 a barrel at 0747 GMT, at $ 86 a barrel, or 1.4 percent, from their last close.
U.S. crude futures West Texas Intermediate (WTI) CLC1 increased by 90 cents, or 1.7 percent, to $ 54.33 a barrel.
The rebound on Wednesday came after a report by the American Petroleum Institute that last Tuesday the inventories of commercial crude in the United States unexpectedly fell by 1.5 million barrels, to 439.2 million, in the week until November 16 .
Imports of crude oil from India of nearly 5 million barrels a day (bpd) also supported prices, traders said.
However, Wednesday's rebound did little to reverse the general market weakness, which saw the crash plunge by more than 6 percent in the previous session, compared to a selloff in global equity markets.
"The global economy is going through a very difficult time and it is very fragile," said Iea head Fatih Birol.
The US investment bank Goldman Sachs said today that the renewed price slump reflects "concerns over oversupply in 2019 … (e) a broader sell-off of commodities and cross-assets while growth problems continue to grow ".
With increased production and worsening demand prospects, the Organization of Petroleum Exporting Countries (OPEC) is pushing for a reduction in supply of between 1 million and 1.4 million barrels a day to avoid the recurrence of the 2014 crash.
"We anticipate further weakness until the reaction of OPEC + (6 December) and the G20 summit is clearer (30 November / 1 December)," said Ashley Kelty, an oil analyst at the investment bank Cantor Fitzgerald Europe.
(GRAPHIC: Brent crude oil curve falls into contango – tmsnrt.rs/2R1kFDa)
Despite the expectation of cuts led by OPEC, the prices of Brent and WTI fell by 28% and 30% respectively from the beginning of October and the entire structure of the forward price curve It's changed.
The forward curve of the Brent <0#LCO:> it was in strong backwardation in October, implying a narrow market with prices for spot deliveries higher than those for the next shipment. This makes oil conservation unattractive.
Since then, however, the curve has moved to contango for most of 2019, which implies an excess supply because higher prices make oil storage even more attractive for subsequent sale.
"A recovery in prices … will require that the Brent's forward curve returns backward from its sudden and significant flattening," Goldman said.
James Mick, energy portfolio manager at the US investment firm Tortoise, said that "part of the supply problem is increasing in US production".
Crude oil production in the US C-OUT-T-EIA has increased by almost a quarter of the year, reaching a record of 11.7 million barrels mainly due to an increase in shale production.
(GRAPHIC: the collapse of oil prices is driven by crude oil in the United States – tmsnrt.rs/2PHBCpL)
Reporting by Henning Gloystein; Editing by Joseph Radford and Richard Pullin