Oil traded higher after a surprise U.S. crude stockpile draw coupled with an outage at a key North Sea pipeline tempered weak economic data from Germany.
Futures in New York recouped earlier losses of 1% as equities strengthened on positive corporate results and after the North Sea Forties oil pipeline system was shut following a power loss this afternoon. It was expected to restart later today.
It is the second time the pipeline has suffered a temporary outage this month, having recently been affected by a lightning strike.
Still, concerns over a slowing economy persisted after IHS Markit’s measure of German manufacturing and services signaled the nation’s slump will persist into the fourth quarter.
Crude surged 2.7% on Wednesday, the biggest rally since Saudi Arabia’s energy facilities were attacked in mid-September. American crude inventories unexpectedly shrank by 1.7 million barrels last week, fueling the rise.
“The tone has changed a bit here, especially that to a certain degree, we are exiting turnaround season and that maintenance may have already hit its low point,” said Bob Yawger director of the futures division at Mizuho Securities USA. “That means you’re going to start seeing some more draws here.”
Oil is down 16% from an April peak as the prolonged trade dispute between Beijing and Washington dents global demand. That’s putting pressure on The Organization of Petroleum Exporting Countries and its partners to consider cutting production further when they meets in December. However, Russia’s Energy Minister Alexander Novak said on Wednesday that none of the OPEC+ members have submitted a proposal to change the existing terms of their deal.
West Texas Intermediate for December delivery was 35 cents higher at $56.32 a barrel on the New York Mercantile Exchange as of 10:50 a.m. local time. The contract added $1.49 to close at $55.97 on Wednesday, the biggest gain since Sept. 16.
Brent for December settlement rose 43 cents to $61.60 a barrel on the London-based ICE Futures Europe Exchange. The contract added $1.47 to $61.17 on Wednesday. The global benchmark crude traded at a $5.31 premium to WTI.
Total U.S. stockpiles of crude and oil products, excluding the strategic petroleum reserve, fell by 9 million barrels last week to the lowest level since May, according to the Energy Information Administration released on Wednesday. Gasoline inventories dropped for a fourth week as demand for the motor fuel rose to its highest since at least 1991 on a seasonal basis. Imports of foreign oil slid to the lowest in more than two decades.
Demand woes still persist in Asia, the biggest consumption center for oil. South Korea’s economy grew at a slower pace in the third quarter, while China last week reported a slump in the pace of economic growth to the lowest since the early 1990s.
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