Oil prices claw back some losses, but oversupply still weighs
SINGAPORE Oil prices regained some ground on Thursday after steep losses the previous day, with a slight drop in U.S. crude inventories stoking hopes that a global supply overhang might slowly retreat.
Brent crude futures were at $53.08 per barrel at 0430 GMT, up 15 cents, or 0.3 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 12 cents, or 0.2 percent, to $50.56 a barrel.
Traders said that the slight gains came on the back of a reduction in commercial U.S. crude stocks, which fell by 1 million barrels last week to 532.34 million barrels, according to the U.S. Energy Information Administration (EIA). However, that level was still near a record high.
The price increases on Thursday followed a more than 3.5 percent drop in both crude benchmarks during the previous session after the EIA reported surging gasoline inventories as well as another rise in U.S. crude oil production to 9.25 million barrels per day (bpd), up almost 10 percent since mid-2016.
U.S. gasoline stocks posted a counter-seasonal build of 1.5 million barrels, because of rising refining activity.
Traders said that the rising U.S. crude production posed a concern that the oil supply overhang would continue, while the jump in gasoline stocks implied a stutter in demand.
“The fact that gasoline stocks rose… worried traders that demand is not as strong as many thought,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
In China, an ongoing fuel supply overhang is persisting as there were signs that Chinese refiners were using record crude oil imports to produce more fuel like gasoline and diesel than the country can absorb.
China’s March gasoline output rose 2.5 percent year on year to 11.24 million tonnes, the highest level since at least April 2014, data from China’s National Bureau of Statistics showed on Wednesday, adding fuel into an Asian market that is already well supplied.
(Reporting by Henning Gloystein; Editing by Joseph Radford and Christian Schmollinger)