Oil rebounded from earlier losses overnight, even as US data showed crude inventories rose to a record high, reviving worries of a persistent glut due to weak demand.
Crude stocks rose by 5.7 million barrels in the week to June 5 to 538.1 million barrels, according to a US Energy Information Administration report.
Product demand rose, however, though it remains far below levels at this time last year. Distillate inventories were higher, but the increase was smaller than in prior weeks.
“We are seeing support in the market coming from products and not crude,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Brent crude settled up 55 US cents to $US41.73 a barrel. US West Texas Intermediate (WTI) rose 66 US cents to $US39.60 after falling more than 2 per cent in the session.
The US Energy Department said on Wednesday that it had purchased 126,000 barrels of crude for the US strategic reserve, supporting prices.
The inventory build exceeded analysts’ expectations and was built on the third consecutive week of big imports from Saudi Arabia, which came to more than 1.5 million bpd. During a price war between Saudi Arabia and Russia in March and April, the kingdom boosted exports.
Brent has more than doubled since falling to a 21-year low below $US16 in April, but some analysts think prices have risen too far with the pandemic still cutting demand.
“The macro factor that has supported the energy complex for more than a month could subside significantly as the strong advance in the equities is beginning to appear overcooked,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
The Organisation of the Petroleum Exporting Countries (OPEC), Russia and others, a group known as OPEC+, slashed oil supplies by 9.7 million barrels per day (bpd), about 10 per cent of pre-pandemic demand. OPEC+ agreed on Saturday to extend the record supply cut for another month until the end of July.