Oil prices settled slightly higher on Tuesday in volatile trading, then were mixed after hours when an industry group's preliminary report showed a surprise build in U.S. crude inventories, Reuters reported.
Oil prices seesawed throughout the day after falling sharply over the previous six sessions. Prices have been pressured as rising U.S. crude production has offset much of the output cuts by OPEC and other countries trying to reduce a global glut in crude.
“We’ve seen rigs increase for the last 14 weeks and if we continue to see that it could put pressure on crude oil prices," said Tariq Zahir, managing member at Tyche Capital Advisors.
Prices dipped after the market settled. The American Petroleum Institute said its data showed U.S. crude oil stocks rose 897,000 barrels in the latest week. Analysts had expected a draw of 1.6 million barrels.
The API also said U.S. gasoline inventories increased. The market will watch closely Wednesday morning to see whether official data from the U.S. Energy Information Administration confirms the API numbers. [EIA/S]
U.S. crude futures CLc1 settled up 33 cents to $49.56 a barrel, breaking a streak that saw the benchmark lose 7.4 percent. Brent crude LCOc1 settled up 50 cents at $52.10 a barrel. Both crude contracts fell after the API report, but U.S. crude bounced back to its settlement price.
The API said gasoline stocks rose 4.4 million barrels. Analysts polled by Reuters had expected a 1 million-barrel decline, as U.S. summer driving season approaches.
"We're seeing less demand last week which could be allowing a build, and it could be furthering that as the weeks go on," Zahir said.
Brent is down about 5 percent since early December, when the Organization of the Petroleum Exporting Countries and Russia agreed to cut output by 1.8 million barrels per day (bpd) in the first half of the year.
On Tuesday, the Interfax news agency quoted Russian Deputy Prime Minister Arkady Dvokovich as saying Russia may increase oil production.
Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky noted that global crude loadings "continue to tick higher" and added that the glut probably will not abate "until we see the oil on the water falling."
Georgi Slavov, head of research at Marex Spectron, said supply should tighten over the next couple of weeks, "not only in the Arabian Gulf but also with Russian oil. Russia is not going to pump and export as much oil as they did in the last couple of weeks."