Oil prices have steadied after a three per cent rise during the previous session, after data showed growing US refined product inventories and record crude production, which could undermine global efforts to support prices.
Brent crude futures rose three cents to $US60.67 a barrel. US West Texas Intermediate (WTI) crude futures fell 28 cents to $US51.83 a barrel.
US fuel stockpiles last week rose more than forecast and were up for the fourth straight week, the Energy Information Administration said. That pressured prices despite a bigger-than-expected crude drawdown.
Gasoline stockpiles rose 7.5 million barrels, far exceeding analysts’ expectations in a Reuters poll for a 2.8 million-barrel gain. At 255.6 million barrels, gasoline stocks were at the highest weekly level since February of 2017.
Distillate stockpiles, which include diesel and heating oil, increased 3 million barrels, versus expectations for a 1.6 million-barrel rise, the data showed.
Crude inventories fell 2.7 million barrels, more than double forecasts.
‘The continued strong rise in oil product stocks is bearish and overshadows the draw in crude oil stocks,’ said Carsten Fritsch, senior commodities analyst at Commerzbank.
The EIA also said US crude production rose to a record high of 11.9 million barrels per day last week, as crude exports jumped close to record highs near 3 million bpd.
Growing U.S production and exports have weighed on oil prices. Output is expected to grow to a new record of more than 12 million bpd this year, with US turning into a net crude exporter in late 2020, the EIA said on Tuesday.
The rising output could undermine oil markets which have been receiving support from supply cuts by the Organization of the Petroleum Exporting Countries, including top exporter Saudi Arabia, and major non-OPEC producer Russia.
Mounting signs of an economic slowdown across the world may also keep oil prices in check.
White House estimates showed on Tuesday that the US economy is taking a larger-than-expected hit from a partial government shutdown.
The outlook for the global economy darkened further after Britain’s parliament on Tuesday shot down Prime Minister Theresa May’s deal to leave the European Union.
Earlier this week, China reported poor December trade data, with exports and imports contracting from a year earlier.
China’s central bank on Wednesday made its biggest daily net cash injection via reverse repo operations on record, in efforts oil markets will watch closely.
‘(China’s) rapidly expanding economy and … thirst for oil has in recent years provided a major pillar of price support,’ Stephen Brennock, analyst at London brokerage PVM Oil, said.
‘This unprecedented slowdown will weigh on the global oil market and do no favours for those hoping for a sustained recovery in prices.’