The prices of oil increased by around $1 per barrel on Wednesday, a considerable leap from the lowest levels seen in months, following the release of US government data revealing a strong demand for more refined fuel. However, concerns over the rising global crude supply in the market remain.
According to Reuters, Brent crude futures LCOc1 has increased by 95 cents at 1.52 percent from the previous, settling at $63.48 per barrel.
The US West Texas Intermediate (WTI) crude CLc1 futures, meanwhile, gained $1.20 at 2.25 percent increase, to settle at $54.63 per barrel.
The Energy Information Administration said that US crude stocks USOLC=ECI has seen yet another increase by 4.9 million barrels last week.
As pointed out by the agency, this supply surge exceeded more than what was initially expected. For nine straight weeks, crude inventories have been rising steadily, which is the longest streak since March of last year.
The EIA report, however, indicated that crude stocks at the Cushing, Oklahoma, which is the delivery hub for WTI USOICC=ECI, saw a considerable decline by 116, 000 barrels, the first drop that occurred in nine weeks.
Meanwhile, gasoline USOILG=ECI stocks fell by 1.3 million barrels, which is the lowest since December last year.
Distillate stocks USOILD=ECI fell by 77,000 barrels, the EIA data went on to indicate.
According to market watchers, the rebound was somehow expected given the extremely sharp move made this week. Nonetheless, the bounce did nothing major to reverse the weakening market, the Express UK report said.
As pointed out by the publication, crude prices plummeted to more than 6 percent from the previous session resulting to world equities getting tumbled down as investors expressed a growing concern on the its economic growth impact.
OPEC's Move
The rate to which oil prices has been declining is believed to continue given that the Organization of the Petroleum Exporting Countries (OPEC) led by the majority of the bloc, Saudi Arabia, has already expressed their plans to cut down the cartel's production by 1 million barrels per day this coming 2019.
Apparently, according to the oil-producing organization, the global demand for crude has alleviated and if they continue to spew out the same amount of output, the prices will eventually get crushed by the ballooning inventory supply.
Saudi, in its part, will lower down its shipments by half a million barrels per day before this year ends.
This move didn't bode well for the White House. In his social media tirade, US President Donald Trump called for Riyadh and OPEC to reconsider or suffer immediate consequences.
