November 21, 2018 / 12:33 AM / 22 days ago

Oil rebounds after prior session's slide; glut worries persist

NEW YORK (Reuters) - Oil prices rose about $1 a barrel a barrel on Wednesday, bouncing from the lowest levels in months, after U.S. government data showed strong demand for refined fuel, but concerns remained over rising global crude supply.

FILE PHOTO: Oil pours out of a spout from Edwin Drake's original 1859 well that launched the modern petroleum industry at the Drake Well Museum and Park in Titusville, Pennsylvania U.S., October 5, 2017. REUTERS/Brendan McDermid/File Photo

Brent crude LCOc1 futures gained 95 cents to settle at $63.48 a barrel, up 1.52 percent. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $1.20 to settle at $54.63 a barrel, a 2.25 percent gain.

U.S. crude stocks USOILC=ECI rose 4.9 million barrels last week, the Energy Information Administration said, a larger-than-expected increase. Crude inventories have risen for nine straight weeks, the longest streak since March 2017. [EIA/S]

Crude stocks at the Cushing, Oklahoma, delivery hub for WTI USOICC=ECI fell 116,000 barrels, the first drop in nine weeks, EIA said.

Gasoline stocks USOILG=ECI fell 1.3 million barrels to the lowest level since December 2017, while distillate stockpiles USOILD=ECI dropped by 77,000 barrels, the EIA data showed.

“Cushing posted the first decline in a couple of months, a possible portent of some leveling that could drive some support into the WTI curve,” said Jim Ritterbusch, president of Ritterbusch and Associates, in a note.

The overall market remained weak after crude fell more than 6 percent the previous session, while world equities tumbled on worries about economic prospects.

Brent has fallen by more than 25 percent since reaching a four-year high of $86.74 on Oct. 3, reflecting forecasts of slowing demand and ample supply from Saudi Arabia, Russia and the United States.

Worried by the prospect of a new supply glut, the Organization of the Petroleum Exporting Countries is talking about reducing output just months after increasing production.

OPEC, Russia and other producers are considering a supply cut of between 1 million barrels per day (bpd) and 1.4 million bpd at a Dec. 6 meeting, sources familiar with the issue have said.

However, Saudi Arabia may find it harder to act to support prices, analysts said, after U.S. President Donald Trump on Wednesday praised Saudi Arabia for helping to lower oil prices.

Riyadh could feel more inclined to heed U.S. demands after Trump promised on Tuesday to be a “steadfast partner” of Saudi Arabia despite saying Crown Prince Mohammed bin Salman may have known about a plan to murder journalist Jamal Khashoggi.

U.S. energy firms cut three oil rigs in the week to Nov. 21, bringing the total down to 885, General Electric Co’s (GE.N) Baker Hughes energy services firm said on Friday.

“It’s fair to say that the price of oil is going to continue to be pretty volatile between now and Dec. 6 when OPEC meets,” said Brian Kessens, managing director at Tortoise. “There’s going to be a lot of different rhetoric and anticipation of what will actually transpire.”

Additional reporting by Alex Lawler and Henning Gloystein; Editing by Marguerita Choy and David Gregorio

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