Oil prices edged up on Wednesday after the Organization of the Petroleum Exporting Countries said it saw no signs of global recession and rival U.S. shale oil production could grow by much less than expected in 2020.
Also supporting prices were comments by Federal Reserve Chair Jerome Powell, who said the U.S. economy would see a “sustained expansion” with the full impact of recent interest rate cuts still to be felt.
“The baseline outlook remains favourable,” Powell said.
Global oil benchmark Brent futures rose 43 cents, or 0.7%, to $62.49 a barrel by 12:21 p.m. EST (1721 GMT), while U.S. West Texas Intermediate was up 45 cents, or 0.8%, at $57.25 per barrel.
Analysts said WTI was up more than Brent ahead of storage data from the U.S. Energy Information Administration (EIA) on Thursday that is expected to show a supply draw at the Cushing hub in Oklahoma and a smaller than normal increase in total U.S. crude stocks.
“We look for WTI to be better supported than the rest of the complex ahead of tomorrow’s weekly EIA report,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
OPEC Secretary General Mohammad Barkindo said global economic fundamentals remained strong and that he was still confident the United States and China would reach a trade deal.
“It will almost remove that dark cloud that had engulfed the global economy,” Barkindo said, adding it was too early to discuss the output policy of OPEC’s December meeting.
He also said some U.S. companies were now saying oil production would grow by just 0.3-0.4 million barrels per day next year – or less than half of previous expectations – reducing the risk of an oil glut next year.
U.S. President Donald Trump said on Tuesday Washington and Beijing were close to finalizing a trade deal, but he fell short of providing a date or venue for the signing ceremony.
“The expectations of an inventory build in the U.S. and uncertainty over the OPEC+ strategy on output cuts and U.S./China trade deal are weighing on oil prices,” said analysts at ING, including the head of commodity strategy Warren Patterson.
In the United States, analysts forecast crude oil inventories climbed 1.6 million barrels last week, which would be the third weekly increase in a row, according to a Reuters poll on Tuesday.
That compares with a 10.3 million barrel build during the same week in 2018 and a five-year average increase for the week of 3.7 million barrels.
ANZ analysts said the prospects for U.S. crude exports had turned bleak after shipping rates jumped last month.
The American Petroleum Institute (API) is scheduled to release its data for the latest week at 4:30 p.m. EST (2130 GMT) on Wednesday, while the weekly report from the U.S. Energy Information Administration (EIA) is due at 11:00 a.m. EST on Thursday. Both reports were delayed by a day for the U.S. Veterans Day holiday on Monday.