NEW YORK (Pakistan Point News / Sputnik - 09th September, 2022) Oil prices rose as traders tried to restore some technical balance to the bear market for crude, despite a government report showing the biggest stockpile build since April that suggested fuel demand was softening as the summer period for peak travel wound down.
New York-traded West Texas Intermediate, or WTI, settled up $1.60, or 2%, at $83.54 per barrel on Thursday, a day after the US crude benchmark plunged 5.7%.
Brent, the London-traded global benchmark for oil, settled up $1.15, or 1.3%, at $89.15 per barrel, after the previous session's 5.2% drop.
With the rebound, WTI remained 36% lower from the 14-year high of $130.50 it hit on March 7 after the West's initial sanctions on Russian energy exports in the aftermath of the Ukraine crisis.
Brent remained 56% lower than its March peak of $139.13.
"Yes, oil looked oversold and today was probably a good day for it to come up a little," said Sunil Kumar Dixit, chief technical strategist for commodities at SKCharting.com. "But the upside for WTI seems limited at $86 and it is less likely to test $90. On the other end, a rejection at $90 per barrel could again open the trapdoor to a much lower downside of $77."
US crude oil inventories rose by 8.845 million last week, their most since the week ended April 8, when there was a build of 9.382 million, the Energy Information Administration said in its Weekly Petroleum Status Report. Industry analysts polled by US media had expected a crude drawdown of 250,000 barrels instead for last week. The crude build indicated weakening demand for fuels with the winding down of the peak summer travel period.
Stockpiles of gasoline, America's top automobile fuel, climbed by a modest 333,000 barrels against expectations for a draw of 1.667 million barrels.
The balance for distillates - the oil variant required for making the diesel needed for trucks, buses and trains, as well as the fuel for jets � rose by 95,000 barrels, less than the rise of 530,000 that had been expected.
Exports of US crude, another important component of the weekly data, slowed to 3.433 million barrels per day last week from the prior week's 3.967 million.
While most of the data released under the Weekly Petroleum Status Report could be regarded bearish, there was at one bullish one � the balance on the Strategic Petroleum Reserve, or SPR, which was at a near 38-year low after continuous drawdowns by the Biden administration to alleviate the shortage of crude supply faced by US refiners.
The SPR stockpile was at 442.5 million barrels last week - its lowest since November 1984.
The Biden administration has been drawing down the SPR since November last year. But outflows from the reserve really accelerated in May when the administration embarked on a battle to bring down the spiraling pump price of gasoline that had bumped US inflation to 40-year highs. The president committed to draw down 180 million barrels from the reserve over a six month period - or roughly one million barrels per day � between May and October.
At latest count, the SPR had released a total of 173.8 million barrels since March, a figure that includes volumes associated with an earlier round of tenders, Bloomberg reported on Thursday.
Gasoline reached a record high of $5.01 a gallon on the average at US pumps in mid-June before tumbling steadily on the back of the SPR releases. On Thursday, it averaged at around $3.75 per gallon, according to the American Automobile Association. Some analysts say the price could be below $3 by October.
US Energy Secretary Jennifer Granholm told Reuters in an interview on Thursday that the administration might consider extending SPR drawdowns beyond October.
