Oil held steady after sinking into a bear market on Wednesday amid ballooning U.S. crude inventories and signs that demand is faltering.
Futures in New York were little changed after falling 3.4% in the previous session. U.S. total petroleum stockpiles jumped by 22 million barrels last week, the biggest increase in data going back to 1990, according to government figures. Data from countries representing around half of global oil consumption show that year-on-year demand growth ground to a halt in March and April, Morgan Stanley said in a note, cutting its Brent forecast for the second half.
Oil has fallen more than 20% since late April as the U.S.-China trade relationship worsened and the White House picked a new tariff fight with Mexico. That’s caused a sharp deterioration in the demand outlook, while the American inventories data are now giving investors additional cause for worry. A meeting of the Saudi and Russian energy ministers in St. Petersburg this week may give some clues as to their response.
West Texas Intermediate futures for July added 6 cents, or 0.1%, to trade at $51.74 a barrel on the New York Mercantile Exchange at 9:22 a.m. local time.
Brent for August settlement advanced 29 cents to $60.92 a barrel on London’s ICE Futures Europe Exchange, after closing down 2.2% on Wednesday. The global crude benchmark traded at a premium of $9.03 to WTI for the same month.
A combination of weak oil demand, soaring imports, record domestic production and lackluster refinery runs drove the jump in total U.S. inventories, accordingto Bloomberg oil strategist Julian Lee. Crude stockpiles are now at the highest level since July 2017.
The meeting in St. Petersburg will pit the Saudis, who want to extend the OPEC+ coalition’s output cuts beyond June, against the Russians, who have at best been non-committal. It will be the first face-to-face meeting between the two nations’ energy ministers since Jeddah in May, when the gap between their interests became visible.
President Vladimir Putin emphasized the differences between the two architects of the OPEC+ deal. He reiterated the desire to continue cooperation, but noted that his country is happy with a lower oil price than its Saudi allies and declined to say whether he supports an extension of production cuts.