Oil steadied near $54 a barrel as a decline in American fuel inventories signaled that demand remains healthy despite ongoing concerns about the global economy.
Inventories of winter fuel in the U.S. fell more than expected last week as cold polar air blasted the nation, though crude stockpiles rose amid record output, according to the Energy Information Administration. Elsewhere, supplies from OPEC face heightened uncertainty after Libya’s eastern leader Khalifa Haftar said his forces have taken control of the country’s largest oil field.
“The weekly report from the EIA on U.S. oil stocks was bullish for outright prices, plain and simple,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. Still, “more hard work is needed to turn this market unreservedly bullish.”
Oil has faltered this month after posting the biggest gain since April 2016 in January. Higher American output is threatening to offset cuts by the Organization of Petroleum Exporting Countries and its allies. While sanctions on Venezuela and Iran are supportive of prices, investors are wary before U.S.-China meetings next week ahead of a March 1 deadline for trade tariffs to rise.
West Texas Intermediate crude for March delivery slipped 0.4 percent to $53.81 a barrel on the New York Mercantile Exchange as of 10:50 a.m. London time. The contract increased 35 cents to $54.01 on Wednesday.
Brent for April settlement dropped 19 cents to $62.50 a barrel on the London-based ICE Futures Europe exchange, after adding 71 cents on Wednesday. The global benchmark crude was at an $8.36 premium to WTI for the same month.
U.S. inventories of winter fuels, including propane, shrank by about 4.9 million barrels combined last week, EIA data showed Wednesday. Distillate stockpiles alone fell by 2.26 million barrels, compared with a decline of 2 million barrels forecast in a Bloomberg survey. U.S. crude output stayed at a record-high 11.9 million barrels a day.
The Bloomberg Dollar Spot index has risen 1 percent this month, capping gains in crude and other commodities priced in the currency. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead a delegation to Beijing next week to lay the groundwork for a meeting between Presidents Donald Trump and Xi Jinping later this month.
Other oil-market news: OPEC and its allies will probably extend their oil-cuts agreement later this year to keep prices at “comfortable” levels, according to Azerbaijan’s energy minister. U.S. imports of Venezuelan crude fell 41 percent to 345,000 barrels a day last week, the least since August, according to preliminary EIA data. TransCanada Corp.’s Keystone pipeline and Enbridge Inc.’s Platte pipeline were shut Wednesday to investigate a possible oil spill in Missouri. Both lines carry Canadian crude to the U.S. More stringent sanctions on Venezuela that bar companies that do business with PDVSA from accessing the U.S. financial system resemble Washington’s measures on Iran, ANZ Banking Group said. The lender sees Venezuelan oil exports quickly falling by 300,000 barrels a day to about 700,000 barrels a day.