Oil steadied below $70 a barrel in London, a level not breached since November, as a surprise surge in U.S. crude stockpiles showed that markets remain adequately supplied.
Brent crude futures, the international benchmark, reversed earlier losses to rise 0.4 percent. American stockpiles surged by the most since January last week, according to Energy Information Administration figures on Wednesday, with a 7.24 million-barrel increase that surpassed analyst and industry estimates. Still, optimism that the U.S. and China are getting closer to a trade agreement is bullish for prices.
Oil has climbed about 30 percent in London this year with consensus growing that the Organization of the Petroleum Exporting Countries and its allies’ output-cut deal will probably be extended. Unplanned supply losses from Iran and Venezuela are also increasingly tightening the market. But as clouds linger over the global economy, and a new flood of shale-oil pours in from the U.S., the rally has failed to reach last year’s highs.
“The market is still licking its wounds after that bullishness,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. “There is quite a strong view in markets that Brent should not move too far from the $60 line as it should be checked by shale.”
Brent for June settlement traded 25 cents higher at $69.56 a barrel on the London-based ICE Futures Europe exchange at 12:39 p.m local time. The global benchmark crude was at a premium of $6.82 to West Texas Intermediate.
WTI for May delivery increased by 24 cents, or 0.4 percent, to $62.70 a barrel on the New York Mercantile Exchange, after falling 0.2 percent on Wednesday.
U.S. inventories expanded as domestic production climbed to a record and exports fell for a second week, according to the EIA. However, the data showed tighter supply of refined products, as distillate stockpiles fell faster than normal for the time of year and gasoline supplies contracted for a seventh week.
Separately, there’s growing optimism that the U.S. and China will soon resolve their protracted trade dispute. The deal that the two nations are crafting would give Beijing until 2025 to meet commitments on commodity purchases and allow American companies to wholly own enterprises in the Asian nation, according to three people familiar with the talks.
Negotiators are “making good headway,” said Larry Kudlow, President Donald Trump’s top economic adviser. “But we’re not there and we hope this week to get closer,” he said.
Other oil-market news: Saudi Arabia raised taxation on Aramco by switching the oil benchmark used to calculate royalties from the actual value of the kingdom’s crude to Brent. The switch, made in 2017, was revealed this week in Saudi Aramco’s bond prospectus. Tensions in OPEC member Libya escalated sharply as strongman Khalifa Haftar’s forces edged closer to the capital Tripoli. French oil giant Total SA is tying up with China’s Tianneng Group to build batteries, moving into mass production of electricity storage technology after snapping up Saft Groupe SA in 2016. Summer is coming to Europe and that can only mean one thing. It must be time to send the continent’s excess gasoline halfway across the planet.