Oil climbed from a three-week low as traders snapped up contracts dragged down by expanding U.S. inventories.
December futures rose as much as 1.7 percent to $45.95 a barrel in New York. They settled at $45.20 on Wednesday after US government data showed stockpiles expanded by 8.03 million barrels last week, the biggest increase since April and more than twice the gain forecast.
“There was a perfect excuse yesterday to send oil through $45 after the bigger-than-expected rise in inventories,” Ole Sloth Hansen, an analyst at Saxo Bank A/S, said by e-mail from Copenhagen. “That did not happen and it could potentially signal that traders are looking to pick up contracts at the bottom of the range that has prevailed since early September.”
Oil failed to sustain a gain above $50 a barrel earlier this month amid signs the market surplus will persist. US inventories remain more than 100 million barrels above the five- year seasonal average as the country’s refinery utilization rate hovers near the lowest since January.
In the Organization of Petroleum Exporting Countries, member states continue to pump above their quota while Iran prepares to ramp up output once sanctions end.
A meeting between officials from OPEC and oil producers outside the group including Russia didn’t discuss restrictions on crude output or setting a target range for prices, Ilya Galkin, the Russian Energy Ministry’s head of international relations, said in Vienna on Wednesday. In September Russia beat Saudi Arabia to become the biggest seller of crude to China.
West Texas Intermediate for December delivery was at $45.92 a barrel on the New York Mercantile Exchange, up 72 cents, at 12:22 p.m. London time. The volume of all futures traded was about 39 percent below the 100-day average.
Brent for December settlement advanced 76 cents, or 1.6 percent, to $48.61 a barrel on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of $2.71 to WTI.
U.S. crude stockpiles rose for a fourth week through Oct. 16, the longest run of gains since April, the Energy Information Administration reported Wednesday. The 8.03 million-barrel jump compares with a 3.75 million-barrel increase forecast in a Bloomberg survey. Production remains unchanged at 9.1 million barrels a day.
Refinery utilization in the world’s biggest economy rose 0.4 percentage points to 86.4 percent after slipping to the lowest level since January in the week ended Oct. 9, according to the EIA.
“Processing rates at U.S. refineries are near the lowest this year, driving stockpiles to gain quite significantly,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone.
“Seasonally speaking though, it is common to see inventories peak in end-October as it’s the off-season.”
Crude oil production in the U.S. was unchanged at 9.096 million barrels a day in the week ended Oct. 16 compared with the previous seven days. The nation’s production is almost back down to the level pumped in November 2014, when OPEC switched its strategy to focus on battering competitors and reclaiming market share.
“The development of U.S. oil production will be the key to the future performance of oil prices,” analysts at Commerzbank AG led by Eugen Weinberg in Frankfurt said in a report.
Venezuela, whose economy is reeling after oil slumped more than 40 percent over the past year, has long urged fellow OPEC members to curb production to boost prices. An “equilibrium” of about $88 a barrel is necessary to ensure that enough new supplies are developed to offset an annual decline in global output of about 10 percent, Venezuela’s Oil Minister Eulogio del Pino said Wednesday, also proposing a meeting of oil-producing nations’ heads of state next month.
More technical meetings will be necessary to clarify the Venezuelan proposal before such a summit, Russia’s Galkin said. “We need two, maybe three technical preparatory meetings to study the proposal more in detail and depth,” he said.
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