Oil prices recovered slightly on Thursday after falling to a six-month low in the previous session. Investors remain concerned about stagnant demand and economic slowdowns in the United States and China.
Brent crude futures were up 27 cents, or 0.4%, at $74.56 a barrel by 0613 GMT. West Texas Intermediate (WTI) crude oil futures were also up 24 cents, or 0.4%, at $69.62 a barrel.
This recovery could be attributed to oil markets being oversold, which could mean a short-term rebound.
In the previous session, data showing that US production was close to record levels despite the decline in stocks worried the market. It would not be wrong to say that part of the downward trend is also due to high product fuel stocks.
Gasoline inventories rose 5.4 million barrels in the week to 223.6 million barrels, the EIA said Wednesday, well above expectations for a 1 million barrel increase.
For the first time in a year, the market structure for Brent contracts has shifted to contango trading, with short-term delivery contracts cheaper than six months ahead. WTI contracts are also already in contango trading.
The market returning to contango indicates less concern about the current supply situation, encouraging traders to stockpile products.
Oil markets appear to be completely bypassing producers’ cartel maneuvers aimed at keeping oil prices high.
Oil prices have fallen nearly 10% since the Organization of the Petroleum Exporting Countries and allies called OPEC+ announced voluntary production cuts totaling 2.2 million barrels per day.
Signs of decreasing inflation fuel fears of a global economic slowdown, resulting in lower global fuel demand.
Research has found that OPEC oil production fell in November, its first monthly decline since July, as a result of declining shipments from Nigeria and Iraq, as well as ongoing cuts by Saudi Arabia and other members of the broader OPEC+ alliance to support the market.
Meanwhile, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman met with grand celebrations on Wednesday to discuss greater oil price cooperation as OPEC+ members; This could strengthen the market’s confidence in the impact of production cuts.
Kuwait and Algeria also reiterated their support and commitment to voluntary cuts.
Russia has promised to disclose more data on the volume of fuel refining and exports after OPEC+ asked Moscow for more transparency about secret fuel shipments from many export points across the country, OPEC+ sources said.
Concerns about the Chinese economy also limit the increases in oil prices. Chinese customs data showed crude oil imports fell 9% in November from a year earlier as high inventory levels, weak economic indicators and slowing orders from independent refiners weakened demand.
While China’s total imports fell month-on-month, exports rose in November for the first time in six months; This suggests that the manufacturing sector may begin to benefit from an increase in global trade flows.
Rating agency Moody’s issued a downgrade warning to Hong Kong, Macau, and many of China’s state-owned firms and banks on Wednesday, just a day after issuing a downgrade warning for China’s credit rating.
