West Texas Intermediate for February delivery advanced as much as $1.07 to $34.34 a barrel on the New York Mercantile Exchange and was trading at $33.60 at 10:13 a.m. London time.
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USA crude-oil supplies fell by 5.1 million barrels last week, the EIA said, but gasoline stockpiles grew by 10.6 million barrels – the biggest weekly build since May 1993 – and distillate supplies rose by 6.3 million barrels.
Crude oil futures recovered 0.47 per cent to Rs 2,366 per barrel today as speculators enlarged positions after it rebounded from a 12-year low in Asia.
Prices were up in early trading after Beijing deactivated a circuit breaker mechanism that was blamed for aggravating equity market crashes earlier this week.
China is the world’s top energy consuming nation. Chinese markets were halted after only 30 minutes for their shortest trading day ever, leaving Shanghai to end 7% lower.
Brent crude prices fell to fresh 11-year lows on Thursday as fresh concerns over China’s economy added to huge storage overhangs, near-record production and slowing demand that have already pummelled prices. It settled down 48 cents at $33.75 in the previous session, after marking $32.16, a level last seen in April 2004.
“The price slide was triggered by further shocking news from China”, said Commerzbank analyst Carsten Fritsch.
The drop was the biggest since August when the value was cut by five percent in a week – sparking weeks of global market turmoil over worries Beijing did not have a handle on its economic crisis.
“The trigger for the latest slide in oil prices has, of course, been anxious about global demand, prompted by the concerns over China”, Julian Jessop, Chief Global Economist at the company said in a report obtained by Trend. The European benchmark crude traded at a premium of 52 cents to WTI.
“On the downside for prices, both countries will be utilizing maximum crude oil production capacity to increase market share at the expense of the other especially with Iran returning to the global market following the nuclear accord”, ING bank said.
The government data also showed a gain in USA crude production, by 17,000 barrels a day to 9.22 million barrels a day, the fourth straight week of increases, and a rise in stockpiles at the Cushing oil hub in Oklahoma.
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Traders shrugged off rising geopolitical risks, including an apparent North Korea nuclear test. Many reckoned that the row between Saudi Arabia and Iran posed little threat to oil shipments, but made an agreement on output even less likely.
