Singapore: Oil rebounded towards $43 a barrel on Thursday after a 10% fall in the past two sessions on bearish data for the US and China, the world’s two largest oil consumers, and ahead of Opec’s meeting this weekend.
Adding further gloom, Japan’s economy posted its sharpest contraction since the oil crisis of 1974 in the final three months of last year, revised government data showed, and economists saw little signs of an early rebound.
US light crude for April delivery rose 59 cents to $42.92 a barrel by 6:35am, having settled more than 7% lower on Wednesday at $42.33.
London Brent crude gained 43 cents to $41.83.
“A two-day $4.50 selloff in nearby crude futures four or five days ahead of an Opec meeting is not a bullish sign for the energy complex,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
Weekly stocks data released by the US Energy Information Administration (EIA) showed a larger-than-expected 700,000 barrel build in crude inventories together with a large 2.1 million barrel rise in distillates stocks.
“Heating oil stocks posted a second counter-seasonal rise. Diesel stocks are still building, reflecting underlying weakness in the economy,” French bank BNP Paribas said in its US weekly statistics comment report.
The market downplayed a bullish 3 million barrel draw in gasoline stocks as demand for the product was off on the week, even though demand for the past four weeks was at 9.02 million barrels per day, up 1.6% from a year ago.
The data, coming after the EIA revised down its demand forecast again a day before for the 11th time in 14 monthly report, compounded the bearish sentiment after Chinese customs data showed a large 15% fall in crude imports in February.
China crude imports have dropped 13% in January-February, the biggest two-month decline in four years.
The global economic slowdown has sent oil prices off peaks over $147 a barrel hit in July, prompting the Organization of the Petroleum Exporting Countries (Opec) to cut supplies by 4.2 million barrels per day since September.
The group meets on Sunday, with some members calling for another output cut and others insisting greater compliance with current agreements is needed.
Saudi Arabia, the biggest and most influential of the 12-member producer group, is among those which believe it is too soon to agree new output targets, sources have said.
The outcome of the meeting remains uncertain.