Investing.com -- Oil prices settled higher Wednesday, rebounding from four-month lows as optimism of sooner Federal Reserve rate cuts helped offset worries about demand following an unexpected build in domestic crude stockpiles.
At 14:30 ET (18:30 GMT), Brent oil futures rose 1.1% to $78.39 a barrel, and West Texas Intermediate crude futures climbed 1.1% to $74.09 a barrel.
Private payrolls disappoint
The crude market has bounced of recent lows after data released earlier Wednesday showed that private payrolls increased at a slower-than-anticipated rate in May.
Companies added 152,000 workers during the month, falling from a downwardly revised total of 188,000 in the prior month, according to figures from payrolls processor ADP. Economists had predicted a reading of 173,000.
The data comes a day after a separate report showed that job openings slipped to their lowest level in over three years in April.
These numbers, which came after a string of weak U.S. economic prints, added to concerns over slowing demand as economic growth cools, but also point to the Federal Reserve cutting interest rates this year.
Additionally, top oil importer China posted mixed PMI readings for May.
Oil nurses steep losses amid demand fears, OPEC+ outlook
Oil prices were nursing steep losses this week, after the Organization of Petroleum Exporting Countries and allies signaled that it planned to begin scaling back some production cuts this year.
The move presented a weak outlook for oil prices going into 2025, especially if demand remained stagnant.
"While the market has been disappointed that OPEC+ will gradually unwind cuts, it is important to remember that this is only from October," analysts at ING said, in a note.
"Our balance sheet continues to show a tightening in the oil market over the third quarter. Therefore, we believe the scale of the sell-off at the front end of the forward curve is overdone."
US inventories in unexpected build
U.S. crude inventories jumped by 1.2 million barrels in the week to May 31, confounding estimates for a draw of 2.3 million barrels, data from the U.S. Energy Information Administration showed, but that was much less than the American Petroleum Institute report a day earlier showing a build of 4 million barrels.
The data showed also showed a build in gasoline inventories by 2.1 million barrels and distillate stockpiles by 3.2 million barrels, compared with estimates for 2.6M and 3M barrels, respectively, as refineries operated at 95.4% of their capacity, up from 94.3% the previous week.
The build in crude inventories fueled further worries about demand at a time when some continue to bet on the season pick up demand over summer
"We think summer oil demand is likely to be pretty healthy and the global inventories are likely to draw between July and September, so we still have a positive view on oil prices into the summer months," Roth MKM said.
(Peter Nurse, Ambar Warrick contributed to this article.)