Oil prices rose on December 12, recouping some of the previous session’s losses after OPEC forecast a supply deficit next year and the U.S. Federal Reserve said the economic outlook was favourable.
Prices had fallen on Wednesday after a report showed an unexpected increase in US crude inventories. The market picked up on Thursday, although the International Energy Agency (IEA) and The Organization of the Petroleum Exporting Countries (OPEC) offered different prospects for the oil market in 2020.
Brent futures rose 28 cents, or 0.4 per cent to $64.00 a barrel, after skidding 1 per cent on Wednesday on the US stocks build-up.
West Texas Intermediate crude was up 12 cents, or 0.2 per cent, at $58.88 a barrel, following a 0.8 per cent drop the previous session.
The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday said it now expected a small deficit in the oil market in the next year, suggesting the market is tighter than previously thought – even before the latest pact with other producers to curb supply takes effect.
Oil prices were also supported by the U.S. Federal Reserve keeping interest rates unchanged at a meeting on Wednesday.
The revised forecast by OPEC marks a further retreat from a prediction of a glut in 2020 as US production growth begins to slow.
Still, US inventories are on the rise. Crude stockpiles last week rose unexpectedly, gaining more than 800,000 barrels, compared with a Reuters poll that forecast a 2.8 million barrel decline.
Inventories of petroleum products also increased with gasoline stocks surging by more than 5 million barrels and distillates gaining a bit over 4 million barrels – with both more than double expectations.
“What made the release even more bearish was the fact that we also saw large stock builds for gasoline and distillate fuel oil,” ING Economics said in a note.
Beyond the balance between inventories and supply, investors are also awaiting news on negotiations between Washington and Beijing to get an agreement to end a long-running trade war before another round of US sanctions kicks in.
The lingering battle between the world’s two biggest economies has hit global growth, in the process denting demand for crude and oil products.
US President Donald Trump is expected to discuss tariffs on Chinese goods set to be imposed on Dec. 15 with top trade advisers as markets brace for fallout in China’s reaction.