By Alex Longley
The Organization of Petroleum Exporting Countries and its friends including Russia agreed on Tuesday to prolong cuts into 2020 as they seek to reduce global stockpiles. But concerns over oil demand proved more decisive for the market following weak manufacturing data from the U.S., China and Europe.
“Clearly, there is no getting away from economic bearishness and cooling demand fundamentals,” PVM Oil Associates Ltd. analyst Stephen Brennock wrote in a report. “This morning, however, has provided a reprieve from the selling frenzy as those searching for a bullish catalyst pin their hopes on another drawdown in U.S. oil inventories.”
West Texas Intermediate crude for August delivery climbed 42 cents to $56.67 a barrel on the New York Mercantile Exchange as of 8:55 a.m. local time. It slid 4.8% on Tuesday, the most in more than a month.
Brent for September settlement rose 63 cents to $63.03 a barrel on the ICE Futures Europe Exchange after slumping 4.1% in the previous session. The spread between contracts for December 2019 and December 2020 narrowed on Tuesday to just $1.91, compared with $2.44 for the same WTI deliveries.
On Wednesday, the global benchmark crude traded at a premium of $6.29 to WTI for the same month.
A Bloomberg survey forecast a smaller weekly decline in U.S. crude stockpiles than that reported by the American Petroleum Institute. The Energy Information Administration is scheduled to release its official data later on Wednesday.
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