(Bloomberg) -- Oil eked out a gain, rebounding from its worst loss in a week, as traders focused on tightening U.S. stockpiles while Europe's Central Bank readied a rescue plan for its economy.
Futures closed 0.3% higher in New York Thursday, after sliding 1.6% the day before. After mostly discounting the stockpile report on Wednesday, investors seemed to reassess the outlook and see buying opportunities, analysts said. The ECB, meanwhile, said it would consider options including rate cuts and renewed quantitative easing as President Mario Draghi warned the economy was looking “worse and worse.”
“Oil's really caught between the two biggest stories in the market right now -- the trade war and geopolitics,” said Tamar Essner, director for energy and utilities at Nasdaq Corporate Solutions. “There's so much two-way risk in the market that I don't think anybody really has conviction on oil right now.”
Crude has fallen 16% since late April as a shaky economy and the U.S.-China trade spat overwhelmed any uplift from OPEC output cuts and tensions in the Middle East. Still, U.S. oil inventories fell by 10.8 million barrels last week to the lowest since late March, while production dropped by the most in almost two years, according to an Energy Information Administration report on Wednesday.
“That was a legitimately good draw on crude,” said Vikas Dwivedi, a global oil and gas economist at Macquarie Capital USA Inc. in Houston. “I think people are focusing on that a little more today and giving the worries on the demand side a little bit of a break.”
West Texas Intermediate for September delivery added 14 cents to close at $56.02 a barrel on the New York Mercantile Exchange The contract has fallen 4.2% in July and is on track for only its second monthly loss this year.
Brent for September settlement rose 21 cents to $63.39 on the ICE Futures Europe Exchange.
See also: OPEC+ Mission to Buoy Oil Market Enters Make-or-Break Phase
The impact on prices may have been offset by Iran saying it will make “utmost efforts” to allow the safe passage of tankers in the Persian Gulf.
Despite demand worries, “tighter supply globally, amid OPEC cuts, Iran sanctions and Venezuelan issues, ultimately support the market,” said Bart Melek, head commodity strategist at TD Securities in Toronto.
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--With assistance from Heesu Lee and Saket Sundria.
To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll, Carlos Caminada
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