Oil climbs as U.S. stockpiles shrink, but election uncertainty overshadows market
Oil rose around 2% on Wednesday after industry data showed crude inventories in the United States fell sharply, but trading was choppy as the outcome of the U.S. presidential election remained unclear, Trend reports with reference to Reuters.
West Texas Intermediate was up 80 cents, or 2.1%, at $38.46 a barrel by 0436 GMT, after trading in a nearly $1 range. Brent crude was up 80 cents, or 2%, at $40.51, after trading between $39.85 and $40.70.
Oil prices fell more than 10% last week as global coronavirus cases soared and more restrictions on movement hit demand prospects. U.S. oil has nearly recouped those losses in three days of gains this week in the run-up to the election.
“People with active positions in the market are trading very very nimbly because the (election) backdrop is a little uncertain,” said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.
Prices in the hours and days ahead are “going to be more financial-flow driven rather than fundamentally driven,” he added.
U.S. crude oil stocks fell sharply last week while gasoline inventories rose, data from industry group the American Petroleum Institute showed on Tuesday.
Crude stockpiles fell by 8 million barrels last week to about 487 million barrels, the American Petroleum Institute showed on Tuesday.
That contrasted with analysts’ expectations in a Reuters poll for an increase of 890,000 barrels.
More lockdowns could put a cap on oil price gains as Italy, Norway and Hungary tightened COVID-19 restrictions, following the UK, France and other countries.
“Politics aside, there are European demand uncertainties given the broader extensions of lockdowns,” Chauhan said, though he noted that in Asia demand for oil and its products is returning.
Supporting prices, OPEC member Algeria backed deferring a planned increase in OPEC+ oil output from January and Russia’s energy minister raised the prospect with the country’s oil producers.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a grouping known as OPEC+, are set to reduce cuts of 7.7 million barrels per day (bpd) by around 2million bpd from January.
Sources said OPEC and Russia are considering bigger production reductions next year to support prices.