Oil traded near $68 a barrel after sliding for two consecutive sessions as rising US inventories and higher output from OPEC and Russia weighed on the market.
Futures in New York were little changed, following a 3.5% slide in the past two sessions. US government data Wednesday showed a surprise gain in nationwide stockpiles. Meanwhile, OPEC’s July output climbed as Saudi Arabia pumped near-record volumes and Russia boosted production to levels not seen since it joined the cartel in a coordinated cut two years ago.
Oil last month posted the worst loss in two years on concern a trade war between the US and China could curb economic growth and limit energy demand. Under constant pressure from US President Donald Trump to cool prices, OPEC and its allies are fulfilling a pledge made in June to increase output to ease concerns over potential supply disruptions in countries such as Iran and Venezuela.
“Oil has been rebounding every time prices fall to near $68 since mid-July,” Makiko Tsugata, a senior analyst at Mizuho Securities Co., said by phone. “We may be seeing a similar move now.”
West Texas Intermediate crude for September delivery traded at $67.85 at 3:51 p.m. in Tokyo. The contract declined $2.47 in the previous two sessions. Total volume traded was about 30 percent below the 100-day average.
Brent for October settlement rose 44 cents to $72.83 a barrel on the London-based ICE Futures Europe exchange. The contract dipped $1.82 on Wednesday. The global benchmark traded at a $6.11 premium to WTI for the same month after the spread widened to as much as $11.43 in June.
Futures for September delivery were little changed at 502.9 yuan a barrel on the Shanghai International Energy Exchange. The contract lost 1.9% on Wednesday.
US crude inventories rose 3.8 million barrels last week, according to data from the Energy Information Administration. That’s compared with a forecast for a 3-million-barrel decline in a Bloomberg survey of analysts. Stockpiles at the Cushing storage hub in Oklahoma fell for an 11th straight week.
“A wide price spread between the US and global benchmarks a while ago made American crude relatively cheap and attracted buyers, helping decrease inventories,” Mizuho’s Tsugata said. “But with the current narrower spread, US crude has lost its appeal.”
Traders also are weighing output from OPEC and its allies following their accord to increase production in June. Saudi Arabia’s output rose by 230,000 barrels a day in July to 10.65 million barrels per day. Higher crude output from the Saudis, along with Nigeria and Iraq, pushed up total OPEC production by 300,000 barrels a day last month.
Meanwhile, Russia boosted its oil production in July to just below the post-Soviet record set in October 2016, Energy Minister Alexander Novak said. That’s equivalent to about 11.21 million barrels a day, a jump of 140,000 from a month earlier, according to Bloomberg calculations based on the ministry’s data. — Bloomberg