NEW YORK (Reuters) – Oil rebounded from earlier losses on Wednesday, even as U.S. data showed crude inventories rose to a record high, reviving worries of a persistent glut due to weak demand.
Crude stocks rose by 5.7 million barrels in the week to June 5 to 538.1 million barrels, according to a U.S. Energy Information Administration report.
Product demand rose, however, though it remains far below levels at this time last year. Distillate inventories were higher, but the increase was smaller than in prior weeks.
“We are seeing support in the market coming from products and not crude,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Brent crude settled up 55 cents to $41.73 a barrel. U.S. West Texas Intermediate (WTI) rose 66 cents to $39.60 after falling more than 2% in the session.
The U.S. Energy Department said on Wednesday that it had purchased 126,000 barrels of crude for the U.S. strategic reserve, supporting prices.
The inventory build exceeded analysts’ expectations and was built on the third consecutive week of big imports from Saudi Arabia, which came to more than 1.5 million bpd. During a price war between Saudi Arabia and Russia in March and April, the kingdom boosted exports.
Brent has more than doubled since falling to a 21-year low below $16 in April, but some analysts think prices have risen too far with the pandemic still cutting demand.
“The macro factor that has supported the energy complex for more than a month could subside significantly as the strong advance in the equities is beginning to appear overcooked,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
(GRAPHIC: Weekly changes in petroleum stocks in the U.S. – here)
The Organization of the Petroleum Exporting Countries (OPEC), Russia and others, a group known as OPEC+, slashed oil supplies by 9.7 million barrels per day (bpd), about 10% of pre-pandemic demand. OPEC+ agreed on Saturday to extend the record supply cut for another month until the end of July.
Reporting by Laura Sanicola; Additional reporting by Alex Lawler and Aaron Sheldrick; Editing by Lisa Shumaker and Alistair Bell