Futures advanced as much as 2.4% in New York after slumping almost 11% the previous seven sessions. U.S. inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report.
Government data Wednesday is forecast to show stockpiles rose for a 10th week. Saudi Arabia’s production climbed back above 10 million barrels a day in February, according to an OPEC report on Tuesday.
Oil last week broke below US$50 a barrel for the first time since December as rising U.S. supply has swamped the impact of supply reductions from members of the Organization of Petroleum Exporting Countries and 11 other nations that started Jan. 1.
While Saudi Arabia increased output by 263,300 barrels a day last month, production is still below a ceiling set under the cut deal.
“We’ve had a severe decline in prices so it’s not a surprise to see a healthy bounce,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “Concerns are that agile U.S producers are replacing the OPEC production cuts. The official crude inventory numbers will be important.”
West Texas Intermediate for April delivery rose as much as US$1.15 to US$48.87 a barrel on the New York Mercantile Exchange and was at US$48.49 at 7:34 a.m. in London. Total volume traded was about 10% above the 100-day average. Prices fell 68 US cents to US$47.72 Tuesday, the lowest close since Nov. 29.
Brent for May settlement rose as much as 84 cents, or 1.7%, to US$51.76 a barrel on the London-based ICE Futures Europe exchange. Prices lost 0.8% to US$50.92 on Tuesday. The global benchmark crude traded at a premium of US$2.56 to May WTI.
U.S. crude inventories probably increased by 3.13 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Stockpiles have climbed to 528.4 million barrels, the highest level in weekly EIA data compiled since 1982.
The volume of crude Saudi Arabia supplied to markets last month fell by 90,000 barrels a day to 9.9 million as the extra supplies were moved into storage, according to a statement from the energy ministry.
Oil will have to drop to the US$30s or lower to dent the bottom line of many drillers now working U.S. shale fields, said Katherine Richard, the CEO of Warwick Energy Investment Group, which own stakes in more than 5,000 oil and natural gas wells. - Bloomberg