Oil Steadies After Two-Day Drop With Glut Concerns To The Fore

Oil held the biggest two-day drop in a month as concerns about global oversupply continued to weigh on sentiment.

West Texas Intermediate traded above $58 a barrel after losing 3% over the previous two sessions, while Brent closed near $62. The US said domestic crude production would hit a record high 13.6 million barrels a day this year, adding to a flood of supply hitting the global market.

“Whether it’s a glut or a super-glut, it’s kind of hard to get away from,” Saad Rahim, the chief economist of global commodities trader Trafigura Group, said on Tuesday in a video published alongside the company’s annual results.

The industry-funded American Petroleum Institute reported US crude inventories shrank by 4.8 million barrels last week, according to a document seen by Bloomberg. However, large gains were seen for fuel stockpiles — both gasoline and distillates such as diesel. Official data will be released on Wednesday.

Crude has been trapped in a tight $4-a-barrel range since the start of November, as oversupply concerns vie with geopolitical risks surrounding the flow of Russian barrels into nations including India. Key market reports from the International Energy Agency and OPEC are due later this week, which may provide more clarity on the outlook.