Oil futures rose Thursday after a five-day slide that sent the U.S. benchmark back below the $70-a-barrel threshold in the previous session to its lowest finish since late June.
Price action
-
West Texas Intermediate crude for January delivery
CL00,
+0.06%CLF24,
+0.06%
rose 63 cents, or 0.9%, to $70.01 a barrel on the New York Mercantile Exchange. -
February Brent crude
BRN00,
-0.09%BRNG24,
-0.09%,
the global benchmark, was up 61 cents, or 0.8%, at $74.91 a barrel on ICE Futures Europe. -
January gasoline
RBF24,
-0.95%
climbed by 0.3% to $2.0339 a gallon, while January heating oil
HOF24,
-0.28%
tacked on 0.6% to $2.5918 a gallon. -
Natural gas for January delivery
NGF24,
-0.39%
traded at $2.542 per million British thermal units, down 1.1%.
Market drivers
Oil has fallen sharply following a Nov. 30 OPEC+ meeting that underwhelmed traders with a round of additional voluntary cuts for the first quarter of next year. The voluntary nature of the overall cuts left traders to question likely compliance with the measures.
“Momentum traders and falling volumes worsened crude’s recent plunge while OPEC’s latest announcement of output cuts and Saudi’s additional threats that they will extend their solo cut beyond Q1 went totally unheard,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note.
“Worse, as the bears saw that investors ignored the supply cuts and threats, they feel more confident to increase their bets against crude,” she wrote.
Meanwhile, worries over demand have continued to plague the market.
Crude imports by China saw a monthly fall of 10% in November to a four-month low of 10.37 million barrels a day, reported S&P Global Commodity Insights, citing Thursday data from the General Administration of Customs.
Still, while China’s total imports dropped on a monthly basis, exports grew for the first time in six months in November, “suggesting that manufacturing is recovering with the global economy recovering some,” said StoneX’s Kansas City energy team, led by Alex Hodes, said in a Thursday note.
Oil traders are also closely watching developments tied to the approval of a referendum in Venezuela last weekend to claim sovereignty over an oil-rich piece of land from Guyana.
Over in the U.S., data from the Energy Information Administration released Wednesday may not have been as bearish as they seemed, said Phil Flynn, senior market analyst at The Price Futures Group.
“There is no doubt that demand is down, [but] unless it stays that way, the global supply and demand balance is still way too tight,” he said in a daily report. If OPEC+ follows through with cuts, and if the weekly drop in U.S. oil production begins to trend, we still should face a supply versus demand deficit.”
On Wednesday, crude slumped after the EIA said gasoline inventories rose 5.4 million barrels last week, while distillate stocks rose 1.3 million barrels.
Rising product inventories offset a larger-than-expected drop in U.S. crude inventories of 4.6 million barrels.
The EIA on Thursday, meanwhile, reported that domestic natural-gas supplies in storage declined by 117 billion cubic feet for the week ended Dec. 1. On average, analysts surveyed by S&P Global Commodity Insights forecast a weekly fall of 105 billion cubic feet.
