Oil prices reclaimed some ground on Thursday after tumbling to a six-month low in the previous session but investors remained concerned about sluggish demand and economic slowdowns in the U.S. and China.
Brent crude futures rose 27 cents, or 0.4%, to $74.56 a barrel by 0613 GMT. U.S. West Texas Intermediate crude futures rose 24 cents, also 0.4%, to $69.62 a barrel.
“Oil markets may have been oversold,” which could mean the recovery is a “short-term rebound”, Tina Teng, a markets analyst with CMC Markets, said in a note.
In the previous session, the market was spooked by data showing U.S. output remains near record highs even though inventories fell, analysts at ANZ said in a note.
Some of the bearishness was also a result of higher product fuel inventories, the ANZ analysts said.
Gasoline stocks rose by 5.4 million barrels in the week to 223.6 million barrels, the EIA said on Wednesday, far exceeding expectations for a 1 million-barrel build.
For the first time in a year, the market structure for Brent contracts switched to trade in contango, with contracts for near-term delivery cheaper than six months later . WTI contracts have also switched to trade in contango over six months out.
A market moving back into contango suggests there is less worry about the current supply situation and encourages traders to put barrels in storage.
Oil prices have fallen by about 10% since the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, announced a combined 2.2 million barrels per day voluntary output cuts.
“Oil markets seem to completely sideline producer’s cartel manoeuvres aimed at keeping oil prices elevated,” said Priyanka Sachdeva, analyst from Phillip Nova, in a note.
“The sign of easing inflation is (also) feeding into fears of a global economic slowdown and in turn dented demand for fuel globally,” Sachdeva said.
A Reuters survey found that OPEC oil output fell in November in the first monthly drop since July, as a result of lower shipments by Nigeria and Iraq as well as ongoing market-supporting cuts by Saudi Arabia and other members of the wider OPEC+ alliance.
Meanwhile, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman met to discuss further oil price cooperation on Wednesday as members of OPEC+, which may strengthen the market’s confidence in the impact of output cuts.
Kuwait and Algeria also reaffirmed their support and commitment to the voluntary cuts.
Russia has pledged to disclose more data about the volume of its fuel refining and exports after OPEC+ asked Moscow for more transparency on classified fuel shipments from the many export points across the country, sources at OPEC+ and ship-tracking firms told Reuters.
Concerns about China’s economy also put a lid on oil’s price gains. Chinese customs data showed that crude oil imports in November fell 9% from a year earlier, as high inventory levels, weak economic indicators and slowing orders from independent refiners weakened demand.
While China’s total imports dropped on a monthly basis, exports grew for the first time in six months in November, suggesting the manufacturing sector may be beginning to benefit from an uptick in global trade flows.
Ratings agency Moody’s put Hong Kong, Macau and swathes of China’s state-owned firms and banks on downgrade warnings on Wednesday, just one day after it put a downgrade warning on China’s sovereign credit rating.
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