Oil rose on Wednesday after Russia repeated its willingness to take part in talks with OPEC producers to cut output and boost prices, although analysts said rising U.S. crude inventories could put a brake on a bigger rally. Russian Foreign Minister Sergei Lavrov said if there is consensus among the Organization of the Petroleum Exporting Countries and non-OPEC members to meet, “then we will meet”.
This helped push the price of oil, which had earlier been set for a third day of declines after data on Tuesday showed another big build in U.S. inventories, off the day’s lows. Brent for April delivery rose 75 cents to $33.46 a barrel by 1444 GMT, pulling away from a session low of $32.30. U.S. crude futures rose 58 cents to $30.45, off a session low of $29.40. The low of $32.30 in Brent also marked the halfway point between the price lows in January and the highs seen earlier this week, and a point at which speculators swooped in to buy. “$32.30 is exactly the 50-percent retracement of the rally that we’ve had and that’s helped.
Now, attention has turned towards inventory (data) for today, on the assumption that a lot of the expected ‘bad news’ has been priced in already,” Saxo Bank manager Ole Hansen said. “Then obviously there is Lavrov doing his utmost to verbally intervene in the market and I think that is also playing its part. So we are having a small bounce at the moment, trying to make up for some lost ground.”
The 70 percent drop in the crude price over the last 18 months has hit the budgets of oil-dependent nations such as Nigeria, Venezuela, Russia and even some of the richer Gulf nations such as Bahrain. Demand for oil, particularly in Asia, proved robust last year, but not enough to absorb near-record supply and ballooning inventories of unwanted crude.
U.S. commercial crude oil inventories likely increased last week to a new record high, while gasoline stocks also built and distillates drew down, an extended Reuters survey showed on Tuesday. The data is due at 1530 GMT on Wednesday. Goldman Sachs in a note on Monday said volatility in the oil price, which is at its highest since the collapse of failed U.S. investment bank Lehman Brothers in 2008, could reach 100 percent as storage capacity comes under pressure.