The price of crude oil tumbled on world markets on a report that US production surged and fuel inventories climbed, but signs that Opec’s plan to drain a global glut is taking hold eased the losses.
Prices fell as much as 1.6% in New York after the Energy Information Administration (EIA) 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 US surge “is absolutely critical to where we go in the next few weeks”, he said.
West Texas Intermediate for February delivery was down 32 cents to $51.79 a barrel in New York, after earlier slipping to $51.26 following the EIA’s weekly report.
The global benchmark, Brent for March settlement advanced 2 cents to $60.66 a barrel on the London-based ICE Futures Europe exchange, after falling 1%.
The price of crude in the US has stayed above $50 a barrel for a week, holding on to a gain earlier this year.
The recent momentum has been spurred by improving trade relations between the US 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% below their early October high point.
Saudi Arabia’s energy minister said he was sure the plan will return global supplies to “normal averages” and “increase confidence” in the market.