Oil prices revive after battering

File photo of an offshore oil platform construction site at the Brasfelf shipyard in Angra dos Reis, 180km south of Rio de Janeiro, Brazil. (AFP PHOTO/Edson Passarinho)

NEW YORK: Oil prices slightly rebounded on Thursday (Oct 22) as traders hunted for bargains lurking in the prior day's steep fall.

US benchmark West Texas Intermediate for delivery in December rose 18 cents to US$45.38 a barrel on the New York Mercantile Exchange. Brent North Sea crude for December delivery, the global benchmark, finished at US$48.08 a barrel in London, up 23 cents from Wednesday's settlement.

The market posted sharp losses of about two per cent on Wednesday as official data showed US crude stockpiles increased much more than expected last week, adding to worries about a global glut that has depressed prices for more than a year.

Offsetting that bearish news a bit were declines in US gasoline and distillate inventories.

"At least in the near term, the market is testing the argument that the decline in product inventories for last week was more critical than the build in crude oil, although we think much of the recovery is more technical in nature," said Tim Evans of Citi Futures. However, he said, "rising stocks continue to confirm an ongoing physical oversupply."

The market also felt pressure from a slowdown in China, which reported this week that gross domestic product grew in the third quarter at its slowest pace in more than six years.

"Worries about the health of the Chinese economy continue to batter commodities prices. In the US, crude stockpiles surged ... and supply glut remains a concern," said Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at professional services firm EY.

Gupta said a meeting between OPEC and non-OPEC oil producers on Wednesday "did not produce any meaningful results as no potential production cuts were addressed".

He said the market would be looking at a Dec 4 policy-setting meeting of the Organisation of the Petroleum Exporting Countries which is expected to "provide vital clues about price development in the medium term".

OPEC, which includes Saudi Arabia, Kuwait and the United Arab Emirates, has maintained high production levels despite the price decline, as cartel members try to hold onto market share.