Oil prices rebounded in Asia on Wednesday, partially reversing further declines overnight, as an industry-group reading showed a sizable decline for last week in U.S. oil and gasoline stockpiles.
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Futures had slid to fresh 5-week lows in declining 2% overnight, driven by accelerating output from Libya and continued uncertainty about the Organization of the Petroleum Exporting Countries' plan for regarding the current production-cut deal.
Some buyers returned to the market, though, after the American Petroleum Institute said U.S. oil inventories fell 4.2 million barrels last week and bulging gasoline stockpiles dropped 1.9 million barrels. Both are larger than the supply drops anticipated in later Wednesday's government report from the Energy Information Administration.
"Even a U.S. inventory drawdown looks unable to offer too much support" for prices, said Stuart Ive, a client manager at OM Financial. But it is enough to cause a short-term "squeeze" and require being "vigilant for [a] reversal" of recent price declines.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in June recently traded up 0.8% at $48.06 a barrel in the Globex electronic session. July Brent crude on London's ICE Futures exchange climbed 1% to $50.97.
Meanwhile, gasoline and diesel futures--which didn't fall as much overnight as oil did--continued to outperform in Asia. June gasoline gained 1.5% to $1.5360 a gallon and diesel rose 1.2% to $1.4850.
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Most market watchers aren't betting for gains to last given the market is still bloated and U.S. oil production continues to pick up.
"We need to see a sustainable uptrend" in prices "and we are definitely not there yet," said Phin Ziebell, an economist at National Australia Bank.
Uncertainty over the OPEC-led production curtailments has been weighing on oil prices of late. Even though most OPEC members have voiced support for extending the cuts, skepticism of their commitment and non-committal attitude of Russia--the world's biggest oil producer--is keeping investors cautious. A final decision is expected to be announced at the end of this month.
"You have to wonder what is the incentive for countries like Russia to keep cutting its own production when it is clear the benefits of the cuts are flowing straight to the U.S. shale producers," said Mr. Ziebell.
Among other refined products, ICE gasoil for May was recently down 0.1% at $446.47 per metric ton.
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(END) Dow Jones Newswires
May 02, 2017 23:53 ET (03:53 GMT)