Oil rebounded from its longest losing streak in two months as uncertainty over an OPEC deal to manage output amid growing U.S. crude stockpiles and the upcoming American election kept markets volatile.
U.S. inventories rose by a record last week, and OPEC members claiming exemption from a deal to limit supplies boosted output in October. While the stockpile gain was a “big surprise,” prices are recovering after falling 8.8 percent the last four sessions, according to Hyundai Futures Corp. A measure of market volatility is near the highest level in more than a month as investors in broader financial markets stay cautious amid a tightening White House race.
“With many uncertainties lined up such as the U.S. elections and an additional interest rate hike as well as the OPEC meeting, the market will remain volatile throughout this year,” Will Yun, a commodities analyst at Hyundai Futures, said by phone from Seoul. The Federal Reserve signaled Wednesday that a December increase in rates is likely.
Oil has retreated from near $50 a barrel, triggered by the failure of the Organization of Petroleum Exporting Countries to agree on country quotas Friday as part of a deal to limit output. While Goldman Sachs Group Inc. sees little probability of an agreement at an official meeting on Nov. 30, Bank of America Merrill Lynch is confident of an accord. OPEC’s “ jawboning” is contributing to instability in the market, according to Barclays Plc.
West Texas Intermediate for December delivery climbed 41 cents to $45.75 a barrel on the New York Mercantile Exchange at 1 p.m. in Hong Kong. The contract fell $1.33 to $45.34 on Wednesday, the lowest close since Sept. 27. Total volume traded was about 16 percent below the 100-day average.
U.S. Stockpiles
Brent for January settlement was at $47.40 a barrel, up 54 cents, on the London-based ICE Futures Europe exchange. Prices fell 2.7 percent to $46.86 a barrel on Wednesday, also the lowest close since Sept. 27. The global benchmark crude traded at a $1.05 premium to January WTI.
U.S. crude stockpiles increased by 14.4 million barrels last week as imports surged the most in almost 20 years, according to an Energy Information Administration report Wednesday. The inventory gain was the biggest in weekly data compiled by the EIA since 1982. Crude output rose for a third week.
“The market is still in a surplus situation, inventories are still high,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Demand growth should see the market into a balanced position within 12 months and that visibility puts a bit of a base under oil.”
Oil-market news:
Libya, Nigeria and Iran, exempt from an OP
