Oil steadies after big plunge on high inventories, lower demand forecasts

Brent crude futures were up 12 cents, or 0.2%, at 60.09 by 0035 GMT.  They fell 3.7% on Wednesday to settle at $59.97 a barrel, the international benchmark’s lowest close since Jan. 28.

U.S. West Texas Intermediate crude futures were also 12 cents, or 0.2%, higher at $51.26. They ended 4.0% lower in the previous session at $51.14 a barrel, the lowest close since Jan. 14.

The U.S. Energy Information Administration (EIA) on Wednesday reported domestic crude stockpiles rose unexpectedly for a second week in a row, climbing 2.2 million barrels last week after analysts had forecast a decrease of 481,000 barrels.

At 485.5 million barrels, U.S. commercial stocks were at their highest since July 2017 and about 8% above the five-year average for this time of year, it said.

On Tuesday, the EIA cut its forecasts for 2019 world oil demand growth.

The negative outlook is prompting hedge fund managers to exit oil positions at the fastest rate since the fourth quarter of 2018 due to increasing fears about the health of the global economy.

Goldman Sachs said an uncertain macroeconomic outlook and volatile oil production from Iran and others could lead OPEC to roll over supply cuts.

With the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) set for the end of June, the market is looking to whether the world’s major oil producers will prolong their supply cuts.

OPEC countries and non-member producers including Russia, have limited their oil output by 1.2 million barrels per day this year to prop up prices.

The energy minister of the United Arab Emirates, Suhail bin Mohammed al-Mazroui, said on Tuesday that OPEC members were close to reaching an agreement on continuing production cuts.

“Fundamental uncertainty on the current and forward states of the global oil market is high,” Goldman said.

“We believe that this will lead the group to roll forward its current agreement, with likely no change to country level quotas given the difficulty in determining required production levels in coming months,” the bank’s analysts said.