Oil Holds Steady as Possible Stock Gain Weighed Against OPEC Cut

Oil held steady after snapping a record losing streak on Wednesday, as traders weighed signs of rising inventories against a possible OPEC cut.

Futures in New York were little changed after rising 1 percent in the previous session, which ended a 12-day slide. An industry report was said to show U.S. stockpiles rose 8.8 million barrels last week, more than double the gain seen in a Bloomberg survey before government data due Thursday. Meanwhile the Organization of Petroleum Exporting Countries signaled it could return to cuts.

Oil has tumbled more than 26 percent from a four-year high in October amid surprise U.S. waivers for sanctioned Iranian crude, as well as rising American inventories and record output. While speculation of renewed production cuts by OPEC and its allies buoyed the market on Wednesday, stockpile data out of the U.S. suggest a glut has already emerged.

“The fact that U.S. crude-oil stocks are still rising sharply shows that the oil market is already oversupplied,” Commerzbank AG analyst Eugen Weinberg wrote in a report.

West Texas Intermediate for December delivery traded at $56.48 a barrel on the New York Mercantile Exchange, up 23 cents, at 8:44 a.m. local time. Prices rose 56 cents on Wednesday following the biggest one-day drop in more than three years in the previous session. Total volume traded Thursday was about 50 percent above the 100-day average.

Brent for January settlement climbed 61 cents to $66.73 a barrel on the London-based ICE Futures Europe exchange, after gaining 65 cents on Wednesday. The global benchmark crude was at a $10.04 premium to WTI for the same month.

OPEC and its partners are considering reducing production by more than the 1 million barrels a day Saudi Arabia proposed earlier this week, people familiar with the matter said. The talks are preliminary, and the size of the final cut will largely depend on the starting point they use, said one of the people.

Nevertheless, Russian President Vladimir Putin has refused to commit to further output cuts, saying that crude around $70 “suits us completely.” Putin said he discussed the price of oil with U.S. counterpart Donald Trump when they met in Paris on Sunday.

Other oil-market news: Amid oil’s recent slide, trading desks were abuzz with chatter of “ negative gamma.” The term describes how traders frenetically sell futures to manage their options exposure, driving down prices and bringing more options into the danger zone. Once the oil industry’s star product, gasoline is now  losing oil refineries money in Europe and has plunged in value against diesel, its main competitor. Canada’s oil sector is  divided over whether to force a temporary cut to production, with some major producers pushing the controversial idea in a bid to ease a supply glut and halt a steep plunge in prices, according to people familiar with the matter. Analysts at Goldman Sachs Group Inc. think they’ve uncovered one of the main culprits behind oil’s epic price plunge: a rush by Wall Street banks to cover their exposure to producers’ hedges.