Crude staged a mild rebound in Asia on Thursday after a drubbing overnight, but still faces a heavy minefield of risk from upcoming China trade data to political winds from elections in the U.K., the testimony to Congress by the fired FBI chief James Comey and continuing diplomatic tension between Qatar and key Arab nations.
On the New York Mercantile Exchange, crude futures for June delivery rose 0.26% to 45.84 a barrel, while on London’s Intercontinental Exchange, Brent gained 0.33% at $48.22 a barrel. China trade data is expected to show a surplus of $46.32 billion for May with exports up 7.0% and imports up 8.5% year on year.
Overnight, crude futures settled sharply lower after data on Wednesday showed that supplies of U.S. crude rose for the first time in nine weeks, adding to concerns that rising US oil output would undermine OPEC and its allies’ efforts to curb supply.
A weekly report from the Energy Information Administration on Wednesday showed U.S. crude, gasoline and distillates stocks swelled in the week ended May 26.
Inventories of U.S. crude rose by roughly 3.3 million barrels in the week ended May 26, confounding expectations of draw of around 3.5 million barrels. Gasoline inventories, one of the products that crude is refined into, rose by 3.324 million barrels against expectations for a rise of only 580,000 barrels, while distillate stockpiles unexpectedly rose by 4.4 million barrels, compared to expectations of a 280,000 rise.
The faster-than-expected increase in gasoline inventories surprised investors, as the summer months are traditionally associated with the start of the U.S. summer driving season, which usually spurs heavier refining activity.
The sharp rise in U.S. inventories comes a day after the EIA lowered its crude oil price forecast and raised its U.S. production outlook for 2018. The government agency said it expects West Texas Intermediate prices to average $53.61 a barrel next year, down 2.7% from its previous forecast. For 2017, it raised its WTI forecast by 0.2% to $50.78.
Oil prices have suffered a volatile start the week, tumbling more than 1% on Monday after Saudi Arabia and other Arab states severed diplomatic ties with Qatar, fuelling investor concerns about a disruption to the global deal to curb the glut supply.
Middle East tensions, however, have eased over the past few days, as Kuwait oil minister Essam al-Marzouq quelled fears about a potential disruption to the OPEC-led deal, insisting that Qatar was committed to the OPEC agreement to restrict supply.
“Qatar is… committed to the supply cut decision and its compliance ratio ranges between 93 and 102 percent,” the Kuwait oil minister said.