NEW YORK (AFP) – Oil prices surged Wednesday after a US stockpiles report showed oil supplies rose less than expected last week, bringing a whiff of relief to concerns about the global glut.
Braced for another large increase in US crude supplies, traders were heartened by the Department of Energy s (DoE) report, with crude supplies rising 3.4 million barrels, slightly below estimates, in the week ending October 23.
Declines in stockpiles of gasoline and distillates also were positive for the market.
“Demand for the products was a nice, encouraging thing,” said Matt Smith of ClipperData.
“The market has been pummelled lower, beaten down and beaten down… a kind of selling exhaustion,” he said, and “there is just a surge of buying interest.”
US benchmark West Texas Intermediate (WTI) for delivery in December soared $2.74, or 6.3 percent, to $45.94 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for December delivery, the global benchmark, closed at $49.05 in London, up $2.24 (4.8 percent) from Tuesday s settlement.
WTI was already moving higher before the DoE report, which was “modestly supportive to the market,” Smith said. “But the market was very much oversold and this has just given a reason for it to rebound.”
He cautioned that the market remains oversupplied, not just in crude oil but in products, too.
“There doesn t seem to be too much out there that would encourage us too much higher from here” in prices, he said.
Meanwhile, traders digested news of a US-Mexico deal to swap oil.
Mexico s state-run energy giant Pemex announced Wednesday that it would, for the first time, import 75,000 barrels of light-crude oil per day from the United States to improve its refinery system, and in return send heavy crude to its northern neighbor.
The swap will allow Mexico to reduce production of fuel oil while obtaining gasoline and diesel for higher value, the company said.