Oil reversed five days of losses as the potential for an OPEC+ production cut overshadowed an uptick in U.S. crude inventories.
Futures climbed 2.3% in New York on Wednesday, gaining the most in a month. Oil markets earlier jumped more than 4% before easing gains as a meeting of OPEC+ officials in Vienna failed to reach a consensus on how to address the impact of the coronavirus. The group extended talks to a third day.
“There’s a lot of optimism in the market from OPEC showing they’re willing to play ball,” said John Zanner, senior strategist at Uplift Energy Strategy. “OPEC also has to balance supply disruptions from Venezuela to Libya and getting Russia to come on board, but the current optimism has some runway.”
Crude’s rebound was a reversal for bearish traders concerned the economic havoc wreaked by China’s coronavirus outbreak will translate into fuel-demand weakness.
A panel of technical experts from the Organization of Petroleum Exporting Countries and its allies weighed the impact of the crisis, with Saudi Arabia pushing for deeper oil-production while Russia favored an extension of the current deal.
In the U.S., prices barely reacted to an Energy Information Administration report that showed a bigger-than-expected rise in American crude inventories. The report also showed the first gasoline draw in 12 weeks.
West Texas Intermediate for March delivery gained $1.14 to settle at $50.75 a barrel on the New York Mercantile Exchange.
Brent for April settlement rose $1.32 to close at $55.28 on the London-based ICE Futures Europe exchange, putting its premium over WTI at $4.36.
Despite Wednesday’s price rebound, near-term contracts were trading for less than future months, a market condition known as contango that signals an oversupply.
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