Oil shrugs off US fuel supply increase
LONDON (Reuters) — Oil rose on Thursday in a sign that investors are wary of pushing the market lower in response to an unexpectedly large rise in US stocks of refined products that has increased concern about the demand outlook.
Brent crude futures were at $61.55/bbl, up 33 cents by 1008 GMT.
US West Texas Intermediate (WTI) crude futures were at $56.16/bbl, up 20 cents, after having fallen nearly 3% on Wednesday.
US crude oil inventories fell by 5.6 MMbbl in the week to Dec. 1, to 448.1 MMbbl, putting stocks below seasonal levels in 2015 and 2016.
But gasoline stocks rose 6.8 MMbbl, to 220.9 MMbbl, according to the report from the US Energy Information Administration (EIA), much more than analyst expectations for a gain of 1.7 MMbbl.
"We had a nice run to the downside yesterday and it seems for now that it's 'take your short profits soon and keep your longs for longer,'" Saxo Bank senior manager Ole Hansen said.
"We are at the time of year when liquidity tends to dry up and people are more concerned about reducing risk than adding it."
PVM Oil Associates said in a note: "Inventories in other products were down by 5.36 MMbbl on the week. The net result is a 2.52-MMbbl draw in total commercial oil inventories."
"Current levels are nearly 7% below last year and the surplus to the 5-yr average is only 3.9%. On balance, the weekly data was not as bad as it seems at first sight."
But more troublingly for the bulls, US oil production rose by 25,000 bpd to 9.71 MMbpd, the highest since monthly figures showing the United States produced more than 10 MMbpd in the early 1970s.
Soaring US output threatens to undermine efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to bring production and demand into balance following years of oversupply.
Sukrit Vijayakar, managing director of energy consultancy Trifecta said there were "darker shadows over the pace of rebalancing, if at all any is taking place."
Reporting by Henning Gloystein and Amanda Cooper; Editing by Tom Hogue and Jane Merriman
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