By Stephanie Yang
Oil prices gained on Wednesday, reversing losses after government data showed that crude stockpiles rose by less than expected last week.
Light, sweet crude for March delivery settled up $1.41, or 2.4%, to $60.60 a barrel on the New York Mercantile Exchange, the biggest one-day gain since December. Brent, the global benchmark, gained $1.64, or 2.6%, to $64.36 a barrel.
Prices pared earlier losses after the U.S. Energy Information Administration reported that the amount of crude in storage rose by 1.8 million barrels in the week ended Feb. 9. The official number was smaller than analyst expectations for a 2.6 million barrel build and estimates from the American Petroleum Institute for a 3.9 million barrel increase.
Those forecasts "put everyone on the defensive," said Donald Morton, senior vice president of Herbert J. Sims & Co., who oversees an energy trading desk. "This data that was released today was more of a neutralizing factor."
The crude market has come under pressure this month amid broader market weakness and a selloff in stocks around the world. However, sentiment recovered Wednesday as U.S. stocks rose and the U.S. dollar declined.
"We're seeing tension shift back to the idea that even with the bearish reports we've seen, global growth in the next year is going to boost energy demand," said Gene McGillian, research manager at Tradition Energy. "Whether or not this is the makings of a full turnaround remains to be seen."
Recent data and forecasts pointing to higher-than-expected U.S. production growth has also reignited fears over the speed at which shale can increase oil output.
According to the EIA, weekly domestic production climbed 20,000 barrels a day last week to 10.27 million barrels a day, a new record.
"Along with a wall of supply from the US, we also expect the OPEC + Russia deal to come to an end in some form during" the second half of the year, UBS analysts wrote in a Wednesday note. "We think this sets the oil market up for a well-supplied backdrop, with prices coming under further downward pressure."
On Wednesday, Saudi Arabia's energy minister Khalid al-Falih reiterated commitments to cutting crude output and rebalancing the global oil market. He also pointed to global inventory data that showed the level of oil stockpiles in developed countries decreasing.
In November, the Organization of the Petroleum Exporting Countries extended a deal with several other countries outside the cartel to limit their production of oil through the end of 2018, with a review in the middle of the year.
"We believe we have to err on the safe side and make sure that the market has balanced," Mr. Falih said.
Meanwhile, the EIA report said gasoline inventories increased by 3.6 million barrels last week, and distillate stockpiles fell by 500,000 barrels.
Gasoline futures gained 1.6% to $1.7130 a gallon, and diesel futures rose 2.6% to $1.8844 a gallon.
Summer Said contributed to this article
Write to Stephanie Yang at email@example.com
(END) Dow Jones Newswires
February 14, 2018 16:16 ET (21:16 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.