Oil
Image Credit: Gulf News archives

New York: Oil gained after suffering its worst reaction to an Opec meeting in more than four years.

Futures rose 0.8 per cent in New York after an industry report showed US oil inventories declined by almost 5 million barrels last week.

Prices were still far from recovering Tuesday’s 4.8 per cent decline, when concerns about the global economy overshadowed Opec and its allies’ decision to extend output cuts for nine months. It was the biggest drop following an Opec gathering since November 2014.

The Organisation of Petroleum Exporting Countries and its friends including Russia agreed on Tuesday to prolong cuts into 2020 as they seek to reduce global stockpiles. But divisions remained over which measure of inventories should be used to determine the scale of the supply glut. Concerns over oil demand resurfaced following weak manufacturing data from the US, China and Europe.

“Clearly, there is no getting away from economic bearishness and cooling demand fundamentals,” PVM Oil Associates Ltd. analyst Stephen Brennock wrote in a report. “This morning, however, has provided a reprieve from the selling frenzy as those searching for a bullish catalyst pin their hopes on another drawdown in US oil inventories.”

West Texas Intermediate crude for August delivery gained 43 cents to $56.68 a barrel on the New York Mercantile Exchange as of 11.11am. London time. It slid 4.8 per cent on Tuesday, the most in over a month.

Brent for September settlement rose 61 cents to $63.01 a barrel on the ICE Futures Europe Exchange after slumping 4.1 per cent in the previous session. The spread between contracts for December 2019 and December 2020 narrowed on Tuesday to just $1.91, compared with $2.44 for the same WTI deliveries. The global benchmark crude traded at a premium of $6.19 to WTI for the same month on Wednesday.

A Bloomberg survey forecast that US crude stockpiles fell by 3 million barrels last week in a third weekly loss. The American Petroleum Institute was said to report the drawdown was almost 2 million barrels larger. The Energy Information Administration is scheduled to release its official data on Wednesday.