Crude prices held gains in Asia on Thursday after disappointing inventory data in the U.S. slammed benchmarks hard overnight and investors saw scope to buy the dip.
On the New York Mercantile Exchange crude futures for May delivery rose 0.63% to $51.71 a barrel, while on London’s Intercontinental Exchange, Brent gained 0.76% to $53.33 a barrel.
The market will take its next cue off U.S. rig count data from Baker Hughes on Friday.
Overnight, crude futures settled lower on Wednesday, as concerns over rising levels of U.S. crude oil production returned, after the Energy Information Administration (EIA) reported U.S. crude inventories fell less than expected.
Oil prices dropped 4%, the biggest one-day decline since early March, after bearish U.S. inventories data, fueled concerns that the increasing levels of U.S. oil production could weigh on OPEC’s efforts to reduce supply.
For the week ending April 12, The EIA said that crude oil inventories fell by 1.034 million barrels compared to estimates of a draw of 1.470 million barrels.
Gasoline inventories grew by 1.542 million against expectations for a drop of 1.938 million barrels while distillate stockpiles fell by 1.955 million barrels, compared to expectations of a 0.988 million decline.
The surprise build in gasoline inventories came against expectations of a draw, as the month of April usually signals the start of the US summer driving season, which is traditionally associated with heavier refining activity.
The glut in U.S. inventories came a day after the EIA’s monthly Drilling Productivity report showed U.S. shale production was set to rise to 5.19 million barrels a day in May.
Market participants remained hopeful that OPEC members would seek to extend its current deal to cut supply at its next meeting in Vienna on May 25.
In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day (bpd). The deal to cut supply came into effect in January this year for a period of six-months until June.
