Oil struggled to recover after suffering its worst reaction to an OPEC meeting in more than four years.
Futures were marginally higher in New York after an industry report showed American oil inventories declined by almost 5 million barrels last week. Prices were still far from recovering their 4.8% loss on Tuesday when concerns about the global economy overshadowed a decision by the Organization of Petroleum Exporting Countries and its allies to extend output cuts for nine months. It was the biggest drop following an OPEC gathering since November 2014.
Oil has swung between gains and losses this week as initial optimism that the OPEC+ coalition would extend their production deal was eclipsed by concerns about global growth. The group agreed on Tuesday to prolong cuts into 2020, but divisions remained over which measure of inventories should be used to determine the scale of the supply glut. Meanwhile, anxieties over global growth have resurfaced following weak manufacturing reports from the U.S., China and Europe.
“Growth concerns continue to weigh on the crude market,’’ said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “Markets are beginning to query to what extent can OPEC+ continue to cut production in sustaining prices. There is limited scope for further supply curbs.’’
West Texas Intermediate oil for August delivery gained 14 cents to $56.39 a barrel on the New York Mercantile Exchange as of 1:55 p.m. Singapore. Futures slid $2.84 on Tuesday, with losses accelerating as the contract crashed through several key technical levels.
Brent for September settlement rose 16 cents to $62.56 a barrel on the ICE Futures Europe Exchange after it slumped 4.1% in the previous session. The spread between contracts for December 2019 and December 2020 fell Tuesday to just $1.91, compared with $2.44 for the same WTI contracts. The benchmark global crude traded at a premium of $6.05 to New York oil Wednesday.
A Bloomberg survey forecast that U.S. crude stockpiles fell by 3 million barrels last week for a third weekly loss, almost 2 million less than the American Petroleum Institute was said to report. The Energy Information Administration is scheduled to release its weekly data on Wednesday.
The slump in oil on Tuesday didn’t appear to phase OPEC, with Secretary-General Mohammad Barkindo telling reporters in Vienna that the drop was an “anomaly.’’ Still, Bank of England Governor Mark Carney warned of dangers from rising protectionism around the world, citing a “widespread slowdown’’ that may require a major policy response.
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