London — Oil prices rebounded from near 2017 lows on Wednesday after preliminary data showed a much larger-than-expected fall in US crude stocks, reviving bullish sentiment about easing oversupply.
Benchmark Brent crude was up 35 US cents at $50.81 a barrel at 10.10am GMT. On Tuesday the futures had settled at their lowest since November 30, when oil cartel Opec decided to cut oil supply.
US West Texas Intermediate (WTI) crude traded at $47.94 a barrel, up 28c. WTI had slid 2.4% on Tuesday on concerns about falling Opec compliance with its production-curbing deal.
Data from the American Petroleum Institute (API) assessing closely watched US oil inventories showed late on Tuesday that crude stocks had fallen last week by 4.2-million barrels, nearly double the drop expected by analysts polled by our source.
The API statistics are helping the market recover, but the underlying sentiment is still bearish," said Tamas Varga, analyst at London brokerage PVM Oil Associates. The US government was set to release official inventory data from the Energy Information Administration on Wednesday at 2.30pm GMT.
The data would provide an update on growth in US oil production, a key factor that has kept a lid on price gains driven by output cuts elsewhere.
[US] production growth has slowed during the past couple of weeks. If [it continues] today it may also add some glimmer of hope for the bulls, who increasingly have been losing patience," said Ole Hansen, head of commodities strategy at Saxo Bank.
Oil investors continue to eye producing countries’ compliance with their pledge made in late 2016 to cut production by about 1.8-million barrels per day by the middle of the year.
Russia, contributing the largest production cut outside Opec, said on Wednesday that as of May 1, it had curbed output by more than 300,000 barrels per day since hitting peak production in October.
Its largest oil producer, Rosneft, said it had contributed just more than 70,000 barrels per day to Russia’s cuts.
This means Russia has achieved its reduction target a month ahead of schedule, just as the latest Reuters survey of Opec production showed compliance had fallen slightly.
More oil from Angola and higher United Arab Emirates output than originally thought meant Opec compliance with its production-cutting deal slipped to 90% from a revised 92% in March, the Reuters survey showed.