Crude Oil Rebounds In Asia As Markets Focus On Output Curbs, Demand

Investing.com – Crude oil prices gained in Asia on Thursday with the market shrugging off downbeat US weekly inventory data on refined products and taking benchmarks higher after sharp falls overnight.

On the New York Mercantile Exchange crude futures for January delivery rose 0.39% to $56.18 a barrel, while on London’s Intercontinental Exchange, edged up 0.36% to $61.48 a barrel.

Overnight, crude oil prices settled sharply lower on Wednesday after data showing crude stockpiles fell for the third straight week failed to offset a larger-than-expected build in gasoline supplies.

Crude oil prices came under pressure after a mostly bearish Energy Information Agency (EIA) inventory report showed crude stockpiles fell more-than-estimated, but inventories of both gasoline and distillates rose more-than-expected.

Inventories of fell by roughly 5.6 million barrels for the week ended Dec. 2, beating expectations of a draw of 3.4 million barrels.

Gasoline inventories – one of the products that crude is refined into – rose by 6.8 million barrels, well above expectations for rise of 1.7 million barrels, while supplies of distillate – the class of fuels that includes diesel and – rose by about 1.7 million barrels, above expectations for a draw of 967,000 barrels.

Market participants noted that while it was not uncommon for gasoline stockpiles to expand in the December period, the massive build in supplies pointed to possible weakness in gasoline demand.

The unexpected rise in product inventories comes against the backdrop of bullish sentiment on oil prices following OPEC’s decision last week to extend the output agreement through 2018.

US oil production last week surpassed the high water mark of this century, and may be the highest since the early 1980s or 1970s at 9.7 million barrels of crude produced each day last week.

Elsewhere, Middle East tension rose as President Donald Trump breaks with decades of US foreign policy, saying he’s directing the State Department to begin preparations to move the U.S. Embassy in Israel from Tel Aviv to Jerusalem.

Prime Minister Benjamin Netanyahu said in a statement that Israel is “profoundly grateful” and that Trump’s announcement is an “important step toward peace.” Saudi Arabia called for an immediate review of the decision and said there could be dangerous consequences.

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