Oil tumbled on a report that U.S. production surged and fuel inventories climbed, but signs that OPEC’s plan to drain a global glut is taking hold eased the losses.
Futures fell as much as 1.6 percent in New York after the Energy Information Administration said American oil drillers pumped 11.9 million barrels a day last week and gasoline stockpiles soared. Yet the same report showed Saudi Arabia slashing crude shipments to American refiners and prices recouped much of the loss later in the session. Fluctuating equity markets added to the volatility.
“Gasoline continues to build at a staggering rate and that’s weighing on prices,” Nick Holmes, a director at Kansas money manager Tortoise, said in an interview. Whether OPEC can offset the U.S. surge “is absolutely critical to where we go in the next few weeks."
West Texas Intermediate for February delivery was down 32 cents to $51.79 on the New York Mercantile Exchange at 12:47 p.m., after earlier slipping to $51.26 following the EIA’s weekly report.
Brent for March settlement advanced 2 cents to $60.66 a barrel on the London-based ICE Futures Europe exchange after falling 1 percent.
Crude has stayed above $50 a barrel for a week, holding on to a gain this year after collapsing nearly 40 percent last quarter. The recent momentum has been spurred by improving trade relations between the U.S. and China, as well as the start of 1.2 million barrels a day of pledged output curbs by Saudi Arabia, Russia and other major producers. Still, prices remain more than 30 percent below their high point in early October.
Saudi Arabia’s energy minister on Wednesday said he was sure the plan will return global supplies to “normal averages" and “increase confidence” in the market.
The EIA said stockpiles of gasoline climbed by 7.5 million barrels -- twice the jump analysts had forecast. That seemed to overwhelm any optimism from a 2.68 million-barrel decline in domestic crude inventories. At the same time, Saudi sales to U.S. refiners fell by 32 percent in the week ended Jan. 11, as output cuts form the world’s biggest oil exporter took hold.