Oil traded near $56 a barrel after falling the most in two months as US gasoline stockpiles expanded more than expected, offsetting a third weekly decline in crude inventories.
Futures were little changed in New York after tumbling 2.9 per cent Wednesday, the biggest drop since Oct. 6. Gasoline stockpiles rose by 6.78 million barrels last week for a fourth weekly advance, according to Energy Information Administration data. That’s more than double the most bearish estimate in a Bloomberg survey. US oil output increased to a record.
West Texas Intermediate for January delivery was at $56.15 a barrel on the New York Mercantile Exchange, up 19 cents, at 1:24pm. London time. Total volume traded was about 16 per cent below the 100-day average. Prices slid $1.66 to $55.96 on Wednesday.
Brent for February settlement advanced 40 cents to $61.62 a barrel on the London-based ICE Futures Europe exchange, after falling 2.6 per cent on Wednesday. The global benchmark traded at a premium of $5.41 to February WTI.
US crude inventories fell by 5.61 million barrels last week, the EIA reported on Wednesday. Oil production expanded for a seventh week to 9.7 million barrels a day, the highest level in weekly data compiled by the EIA since 1983.
“The decline in crude oil inventories was offset by an even larger increase in product inventories,” said Norbert Ruecker, head of commodity research at Julius Baer Group Ltd. in Zurich. “We stick to our cautious view and see more price downside than upside.”
Oil has advanced about 18 per cent since the start of September and is heading for a second yearly gain as Opec and its allies extend supply cuts, yet prices have slipped from a two-year high last month. A sustained run above $60 a barrel would be needed for a fresh surge in US output, JPMorgan Chase & Co. said in a note after talks with shale operators in the Permian basin.