Oil advanced after the biggest two-day drop in almost seven years as prices below $30 a barrel drew buyers.
Futures gained 1.8 percent in New York, paring a drop of 11 percent the previous two sessions. U.S. crude inventories expanded by 3.8 million barrels last week, the American Petroleum Institute was said to report Tuesday. Government data Wednesday is forecast to show record supplies expanded for a fourth week, according to a Bloomberg survey. Foreign Minister Sergei Lavrov reiterated Russia’s willingness to talk to the Organization of Petroleum Exporting Countries, although an envoy from the nation based in Vienna said a meeting soon is unlikely, according to Interfax.
“After a return to recent lows we expected to see some bottom-picking coming to the market,” Olivier Jakob, managing director at consultants Petromatrix GmbH, said by e-mail from Zug, Switzerland. “Russia continues to produce headlines about wanting to sit-down with OPEC and Saudi Arabia continues to hide.”
Oil has lost about 18 percent this year amid brimming U.S. crude supplies and the outlook for increased exports from Iran after the removal of international sanctions. The slump continues to take its toll on oil producers, with Exxon Mobil Corp. cutting its drilling budget to a 10-year low and Chevron Corp. seeing its credit rating cut by Standard & Poor’s for the first time in almost three decades.
West Texas Intermediate for March delivery rose 56 cents to $30.44 a barrel on the New York Mercantile Exchange at 1:33 p.m. London time. The contract lost 5.5 percent to $29.88 on Tuesday, closing below $30 for the first time since Jan. 21. Total volume traded was about 51 percent above the 100-day average. Prices fell 30 percent last year.
Brent for April settlement was 63 cents higher at $33.35 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $1.52 to $32.72 on Tuesday. The European benchmark crude was at a premium of $1.25 to WTI for April.
Prices may surge about 50 percent by the fourth quarter as U.S. crude output declines, according to the median of 17 estimates compiled by Bloomberg this year. WTI will reach $46 a barrel in the last three months of 2016, while Brent will trade at $48 during the same period, the data show. A global surplus that fueled oil’s decline to a 12-year low will shift to deficit as shale production falls, according to Goldman Sachs Group Inc.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, increased by 141,000 barrels last week, the API said, according to a person familiar with the figures. Nationwide supplies probably expanded by 4 million barrels through Jan. 29, the Bloomberg survey showed before an Energy Information Administration report Wednesday.
Inventories rose for a third week through Jan. 22 to 494.9 million barrels, the highest level in weekly data published by the EIA since August 1982. Supplies are more than 120 million barrels above the five-year seasonal average.
Exxon is curbing its spending on rig leases, floating oil platforms, gas terminals and other projects by 25 percent this year to $23.2 billion after reporting its smallest annual profit since 2002. That represents the leanest spending plan since 2007. Share buybacks that cost the Irving, Texas-based company half a billion dollars during the final three months of 2015 also have been suspended.
BP Plc, Europe’s third-largest oil company, reported a 91 percent decline in fourth-quarter adjusted profit Tuesday, prompting the biggest drop in its shares since 2010. Royal Dutch Shell Plc reports earnings Thursday.