Investing.com – A surprise inventory drawdown at the delivery hub for U.S. crude futures, along with suggestions that global supplies could balance by middle of next year, turned into a 3% rally for oil on Thursday, though some traders said the gains may not last due to the mediocrity of the data.
Futures of New York-traded West Texas Intermediate crude, as well as U.K. Brent, had a lackluster start for the U.S. session despite market intelligence firm Genscape estimating drawdown of nearly 822,000 barrels at the Cushing, Okla. delivery hub for the week to Dec. 11, traders who saw the data said. While the inventory drop was a break from the sharp weekly builds of about 1 million barrels or more seen recently in Cushing, higher pipeline capacity should soon bring more oil into the hub, analysts said.
settled up $1.43 cents, or 2.8%, at $52.58 per barrel.
rose by $1.32, or 2.2%, to $61.47 by 3:00 PM ET (20:00 GMT).
Earlier on Thursday, the International Energy Agency (IEA), which represents the interest of energy consumers in the West, gave oil bulls some hope too by in the second quarter of next year, versus a month ago when it said that it expected a surplus for all of 2019.
But the IEA’s latest forecast also said any balancing of oversupply expected in the first half of the year would be predicated on OPEC and its allies keeping to their promise of cutting a combined 1.2 million barrels per day in supply through June.
The positive Genscape number for Cushing and the somewhat bullish forecast by the IEA lifted WTI and Brent by about 20 cents per barrel, or 0.5%, in midmorning trade. But just before the close, the market suddenly took off, for reasons few traders could fathom.
“It doesn’t look like there’s much news behind these gains,” said John Kilduff, partner at New York energy hedge fund Again Capital. “I’d be wary, to say the least.”
Contrary to market expectations, oil prices have recovered little since the enlarged OPEC+ group announced production cut plans last week, defying U.S. President Donald Trump, who had demanded the group keep supply flowing unhindered and possibly at lower prices.
With just about two weeks to the end of 2018, WTI remains down about 13% on the year and some 30% lower from four-year highs of nearly $77 per barrel hit in early October. Brent is down about 8% on the year and nearly 30% lower from four-year highs of nearly $87 per barrel hit two months ago.
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Source: Investing.com
