TOKYO: Oil rose on Wednesday after industry data showed crude inventories in the United States fell sharply, but trading was choppy as the U.S. presidential election results were unclear.
West Texas Intermediate was up 65 cents, or 1.6%, at $38.27 a barrel by 0650 GMT, after trading in a nearly $1 range. Brent crude was up 61 cents, or 1.6%, at $40.36, after trading between $39.85 and $40.80.
Oil prices slumped by more than 10% last week as global coronavirus cases soared and more restrictions on movement hit demand prospects. Oil prices have nearly recouped those losses in three days of gains this week in the run-up to the election.
“There’s a lot of volatility across the board,” said Jonathan Barratt, chief investment officer at Probis Group in Sydney. Oil is “running on a bit of thin air up here and you will find that senses will prevail and prices will come back to the median. We are still in a range.”
Equity markets swung around, while bonds were trading higher as vote counting progressed and showed the election was closer than polls had forecast, with the outcome possibly still in doubt for days.
U.S. crude oil stockpiles fell sharply last week while gasoline inventories rose, data from industry group the American Petroleum Institute (API) showed on Tuesday.
Crude stockpiles fell by 8 million barrels to about 487 million barrels, the API said.
That contrasted with analysts’ expectations in a Reuters poll for an increase of 890,000 barrels.
More lockdowns could put a cap on oil price gains as Italy, Norway and Hungary tightened COVID-19 restrictions, following the UK, France and other countries.
“Politics aside, there are European demand uncertainties given the broader extensions of lockdowns,” said Virendra Chauhan, oil analyst at Energy Aspects in Singapore, though he noted that Asian demand for oil and its products is returning.
Supporting prices, OPEC member Algeria backed deferring a planned increase in OPEC+ oil output from January and Russia’s energy minister raised the prospect with the country’s oil producers.
The Organization of the Petroleum Exporting Countries (OPEC)and allies led by Russia, a grouping known as OPEC+, are set to reduce cuts of 7.7 million barrels per day (bpd) by around 2million bpd from January.
Sources said OPEC and Russia are considering bigger production reductions next year to support prices.
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