Investing.com – Down one day and up the next, oil’s yo-yo pattern continued Wednesday, with the market moving to any headline that remotely mattered in the absence of substantive developments on U.S.-China talks and OPEC production cuts.
U.S. West Texas Intermediate crude settled up 57 cents, or 1.1%, at $53.45 per barrel, recouping about two-thirds of the previous day’s loss.
U.K. Brent oil closed up 68 cents, or 1.2%, at $59.42.
“The position reports and the price action do not build conviction that this market can hold price rebounds for more than three days,” said Olivier Jakob at PetroMatrix, an oil risk consultancy in Zug, Switzerland.
“Brent is stuck between resistance at $60 and support at $58. WTI is between resistance at $54 and support at $52.”
On Wall Street, U.S. stocks were flat on Wednesday as a raft of upbeat earnings reports underlined a solid start to third-quarter results, while concerns over an escalation in the U.S.-China trade war and weak economic indicators lingered.
Oil was down earlier in the day as concerns over the global demand mounted after the International Monetary Fund said on Tuesday the U.S.-China trade war would cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis.
Prices found some support as traders took the quiet in U.S.-China trade negotiations as a sign that officials from the two sides were working on something positive. U.S. President Donald Trump announced jubilantly last week that the two countries had reached “phase one” of a pact, though the Chinese response was more measured.
Oil was also supported by indications that OPEC could announce further curbs to oil output in December. OPEC and its allies meet on Dec. 5-6 in Vienna to review output policy.
On Tuesday, OPEC Secretary-General Mohammad Barkindo said there is an option for OPEC and its allies is to implement deeper cuts in oil production. But Russia, which is key to OPEC’s ongoing commitment to reduce 1.2 million barrels per day from the global market, hasn’t said if it desires deeper cuts.
Energy traders are looking ahead to inventory data later in the day. The American Petroleum Institute will release its weekly stockpile report at 4:30 PM ET, a day later than usual due to the Columbus Day holiday.
The EIA is to publish its weekly report on domestic oil inventories on Thursday, with analysts expecting a supply build of 2.77 million barrels after a rise of 2.91 million barrels last week.
But some think the EIA could shock the market with a much higher inventory number.
“The whisper numbers on weekly oil inventories are seeming to get bigger,” said Phil Flynn, analyst at brokers Price Futures Group in Chicago.
“The base case for this build is the fact that U.S. refinery runs are still at an extremely low rate and U.S. imports and an expected release from the Strategic Petroleum Reserves has some estimates of the builds being as high as 11 million barrels," Flynn said. "While that may not happen, hedge funds that are carrying a heavy short position into inventories better hope they are right because if they are not, we should get a huge short-covering rally.”