Futures recovered 0.8 percent in New York, paring a slump of 7.6 percent in the past four sessions that pushed prices to the lowest since Nov. 29, the day before OPEC agreed to trim supplies. U.S. stockpiles have expanded to a record for four straight weeks and output has surged to the highest level in more than a year, government data showed Wednesday.
Oil had fluctuated above $50 a barrel since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply for six months starting Jan. 1. Saudi Arabia’s Oil Minister Khalid Al-Falih said this week global inventories are falling slower than expected, opening the door to extending an output-cut deal.
“The oil market had grown complacent to downside risks following a period of low volatility supported by OPEC output cuts,” said Jens Pedersen, senior analyst at Danske Bank A/S in Copenhagen.
West Texas Intermediate for April delivery gained 47 cents to $49.75 a barrel on the New York Mercantile Exchange at 9:38 a.m. in London. Total volume traded was in line with the 100-day average. The contract lost $1 to $49.28 on Thursday, the lowest close since Nov. 29. Prices are set for the biggest weekly loss since Nov. 4.
Brent for May settlement was 40 cents higher at $52.59 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 92 cents, or 1.7 percent, to $52.19 on Thursday, the lowest close since Nov. 30. The global benchmark crude traded at a premium of $2.30 to May WTI.
U.S. crude inventories rose by 8.2 million barrels last week to 528.4 million, the highest level in weekly data compiled by the Energy Information Administration since 1982. Output advanced for a third week to 9.09 million barrels a day, the most since February 2016.
- Oil production in the Permian shale, which extends from western Texas into southeast New Mexico, will rise by 600,000 to 700,000 barrels a day in the year through December and “a lot of that” will be exported, Mike Loya, the head of Vitol in the Americas, said in an interview in Houston.
- Implied volatility is climbing, typically an indicator that investors believe prices are set to fall and risk perception is worsening.