Oil prices rose Wednesday, but year-end window-dressing is keeping a lid on the rise, with bullish money managers hit hard by the selloff reluctant to buy more as 2018 winds to a close.
"Overall price action remains poor and we need to see a few decent closes as well to perhaps get the demand bulls back in the market as they have clearly been beaten up and will not want to add to the pain this close to year-end," said Scott Shelton, broker and analyst for ICAP (LON:NXGN) in Durham, N.C.
In addition, OPEC is suggesting that the road to rebound for crude prices may be more challenging than thought as it lowered demand expectations for its 2019 supply by another 100,000 barrels per day.
U.S. West Texas Intermediate crude was up 47 cents, or nearly 1%, at $52.12 per barrel, by 12:52 PM ET (17:52 GMT) after the Energy Information Administration reported a crude drawdown of just 1.2 million barrels last week versus analysts' forecasts for a drop of almost 3 million.
Brent, the U.K.-traded global benchmark for crude, rose by 61 cents, or also 1%, to $60.81 per barrel.
Trade group American Petroleum Institute issued on Tuesday a staggering 12 million-barrel draw sample as its view on what the EIA could report on Wednesday. The previous week's official crude draw was 7.3 million barrels .
"The divergence from the large inventory decline reported by the API makes the report appear more negative than it actually was," John Kilduff, partner at New York energy hedge fund Again Capital, said, referring to the EIA's latest dataset.
With just three weeks to the end of 2018, WTI remains down about 14% on the year and some 31% lower from four-year highs of nearly $77 per barrel hit in early October. Brent is down about 9% on the year and some 30% lower from four-year highs of nearly $87 per barrel hit two months ago.
The EIA said gasoline inventories rose by 2.1 million barrels last week, compared to analysts' expectations for a build of almost 2.5 million. Distillate stockpiles, which include diesel fuel, unexpectedly decreased by nearly 1.5 million barrels, compared to forecasts for a gain of 1.8 million.
The products numbers were altered by refinery runs remaining little changed at 95.1% of capacity, despite expectations of a ramp-up to meet year-end demand for gasoline and diesel due to increased holiday travels and trucking to cart festive goods.
"Refinery runs ticked a little lower, but still remain nearly half a million barrels per day above year-ago levels," said Matthew Smith at New York-based Clipperdata, which tracks crude cargoes.
Kilduff of Again Capital noted that crude exports, one of the most-closely-watched numbers in the weekly report after the U.S. turned into net exporter of oil lately, fell by almost 1 million bpd last week.
"The volatility around that data series may end up staying with us for a while," Kilduff said.
OPEC said 2019 demand for its crude would likely fall to 31.44 million bpd, 100,000 less than predicted last month, as rivals pumped more and a slowing economy curbs demand growth.
The Saudi-dominated OPEC and its Russian-led allies committed last week to cut global supplies by 1.2 million bpd over the next six months to pull prices higher and balance a market again tilting toward a glut like three years ago due to voluminous U.S. production.
