Oil rebounds near $48 on bargain-hunting after sharp fall
LONDON – Oil steadied at around $48 a barrel on Thursday, as investors sought bargains after a sharp fall the previous day on an unexpectedly large buildup in US gasoline stocks and a tepid demand outlook.
Brent crude climbed 40 cents to $48.15 a barrel by 0943 GMT, after ending the previous session down $1.33.
US West Texas Intermediate (WTI) crude rose 48 cents to $44.96 a barrel, having slumped $1.88 on Wednesday.
“It seems like there’s some technical stabilization at the $48 level after the steep sell-off,” said Bjarne Schieldrop, head of commodities research at SEB in Oslo.
Crude prices fell sharply on Wednesday on data from the Energy Information Administration (EIA) that showed a bigger-than-expected rise in gasoline stockpiles in the United States.
Higher inventories and sluggish demand make many analysts think the long-term outlook for crude will remain downbeat.
“Long-dated contracts are ticking lower and that will push prompt prices lower to ensure there is still a contango,” Schieldrop said.
Contango is a market structure in which prices are higher at later dates than for prompt delivery, making it profitable to store oil.
The EIA data showed gasoline stocks rose by 1.4 million barrels last week, compared with analyst expectations in a Reuters poll for an 819,000-barrel gain.
The build in motor fuel in the world’s largest oil consumer after the end of its summer driving season raised new concerns about high product stocks during autumn months.
Longer-term, many analysts see a continuing supply surplus weighing on the market.
“Despite early signs of a cutback in U.S. shale production, the underlying supply and demand fundamentals remain weak for both Brent and WTI,” said BMI Research, part of the Fitch ratings agency.
“This, alongside uncertainties surrounding China and the broader health of the global economy, is capping any recovery in prices.” –Reuters