Oil prices rebounded on Wednesday after falling by as much as 3 percent in the previous session, as data from an industry group showed a smaller-than-expected build in U.S. crude stockpiles.
The American Petroleum Institute (API) reported a crude build of 1.4 million barrels for the week ended Sept. 9, smaller than the 3.8 million barrel rise expected by analysts. The U.S. government will issue official inventory data later on Wednesday.
Brent crude futures were trading at $47.39 per barrel at 0704 GMT, up 29 cents, or 0.6 percent, from the last settlement.
U.S. West Texas Intermediate futures were up 38 cents, or 0.9 percent, at $45.28 a barrel.
“Long suffering oil bulls will now turn nervously to the U.S. EIA’s commercial crude inventory numbers to be released this evening in New York,” said OANDA’s senior market analyst Jeffrey Halley. “It was an unexpected undershoot in these numbers last week that set off the rally in crude last week.”
The price rally was short lived as crude prices tumbled on Tuesday after the International Energy Agency (IEA) said slowing oil demand growth amid growing inventories and supplies could signal that the market will be oversupplied at least through the first half of 2017.
“Oil came under heavy selling after the IEA released its monthly report showing it expected the surplus in the market to persist well into 2017,” Australian bank ANZ said in a note. “Weaker oil prices are likely to weigh on the sector, with investor appetite remaining weak.”
Gains in crude prices could also be capped by rising crude exports from Libya after the country’s National Oil Corporation (NOC) said on Tuesday it would immediately start working to resume crude exports from ports seized in recent days by forces loyal to eastern commander Khalifa Haftar.
Libyan production could be raised to 600,000 barrels per day (bpd) from about 290,000 bpd within a month, further adding to the global crude supply glut.