02 August 2017, London — Oil shook off a raft of bearish headlines on Wednesday, as investors and traders took advantage of earlier losses and pushed the price back toward $52 and this week’s eight-week highs.
Brent crude futures LCOc1 were up 14 cents at $51.92 a barrel by 1125 GMT, up from a session low of $51.18. The price hit $52.93 on Monday, its highest since late May.
U.S. West Texas Intermediate crude CLc1 edged up 2 cents to $49.18 a barrel.
Both contracts fell sharply the previous day after Royal Dutch Shell said its 400,000-barrels-per-day (b/d) Pernis refinery in the Netherlands would remain offline for at least the next couple of weeks following a fire.
Petromatrix strategist Olivier Jakob said Wednesday’s price recovery had more to do with technical trading than with outright fundamentals, which had encouraged traders and investors to buy crude futures.
“There are some technical battles out there today. We are trading around the 200-day moving average and I think that is where a lot of the action of the last two days has been,” Jakob said.
Brent futures fell through their 200-day moving average on Monday, but by Wednesday managed to vault above this trendline, which was last around $51.85 a barrel.
Traders are awaiting the release of official U.S. government data on weekly crude inventory levels after an independent survey on Tuesday showed an unexpected rise of 1.8 million barrels.
The Energy Information Administration is scheduled to release weekly stockpile data at 1430 GMT on Wednesday.
Meanwhile, production from the Organization of the Petroleum Exporting Countries hit a 2017 high of 33 million bpd in July, despite the group’s pledge to restrict output along with other non-OPEC producers.
Energy consultancy Douglas Westwood reckons this year’s oil market will be slightly undersupplied but that the glut will return next year, and last until 2021.
“Oversupply will actually return in 2018. This is due to the start-up of fields sanctioned prior to the downturn,” said Steve Robertson, head of research for global oilfield services at Douglas Westwood.
*Henning Gloystein; Editing: Dale Hudson & Jason Neely – Reuters