Oil prices rebounded on Wednesday after falling for the past three sesssions with worries about oversupply and a slowing global economy keeping markets under pressure though sentiment may be shifting as falling equity markets seemed to stabilize.
West Texas Intermediate futures (WTI) climbed 4 cents, or 0.09 percent, to $46.28 per barrel by 0443 GMT, after plunging 7.3 percent the day before in a session when it touched its lowest since August 2017.
Global benchmark Brent crude futures rose 0.4 percent, or 23 cents, at $56.49 per barrel. It dropped 5.6 percent on Tuesday, at one point hitting a 14-month low.
WTI prices are holding as “traders look for some solace in US equity markets as risk sentiment appears to be stabilising,” said Stephen Innes, head of trading for Asia-Pacific at OANDA
“But we are far removed from any bullish flip in investor sentiment.”
The S&P 500 ended up slightly on Tuesday and the Dow Jones Industrial Average rose 0.35 percent as both indices ended losing streaks.
Further adding to the oversupply concerns, the American Petroleum Institute said on Tuesday US crude stocks rose unexpectedly last week, while gasoline inventories increased.
If the build in crude stockpiles is confirmed by US government data Wednesday, it will be the first increase in three weeks.
Meanwhile, analysts said that upcoming output cuts led by the Organization of the Petroleum Exporting Countries (OPEC) had so far failed to stimulate the market as they were not due to kick in until next month.
Output from de facto OPEC leader Saudi Arabia as well as the United States and Russia – leading producers outside the group – has been at or near record highs.
The US government said shale production is expected to climb to over 8 million barrels per day (bpd) for the first time by the end of December.
Russian oil output is so far this month at a record 11.42 million bpd, an industry source told Reuters.
However, there were some factors tightening supply, with Libya’s state oil company declaring force majeure at the country’s largest oilfield.
That came a week after the firm announced a contractual waiver on exports from the field following its seizure by protesters.
Elsewhere, a speech marking 40 years of market liberalisation by Chinese President Xi Jinping offered no specific support measures for the second-largest economy, disappointing investors who were expecting fiscal policy loosening and a tax cut.
China’s Shanghai crude futures fell 5.8 percent to trade at 389.4 yuan ($56.53)per barrel on Wednesday, the lowest since their launch in March.
Oil market investors were also turning their attention to the outcome of a two-day meeting of the US Federal Reserve that is due to end on Wednesday.
The Fed is expected to raise US interest rates for the fourth time this year though the central bank may temper the outlook for further increases in 2019 due to concerns about the economy.