By Barani Krishnan
Investing.com - Oil prices rebounded on Wednesday ahead of the U.S. government’s weekly report on stockpiles that could show large drawdowns due to data distortion caused by Hurricane Delta.
Crude prices also got a boost from optimistic talk by the OPEC+ alliance of oil producing countries that it expects compliance to production cuts to be as high as 102% in September.
Occidental Petroleum (NYSE:OXY) CEO Vicki Hollub provided further optimism by forecasting that global supply and demand will rebalance by end-2021 and that the United States will never return to the record production of 13 million barrels per day hit in March this year.
New York-traded West Texas Intermediate, the key indicator for U.S. crude prices, settled at $41.04 per barrel, up 84 cents, or 2.1%, on the day. On Tuesday, WTI rose 2%. The gains of the past two sessions accounted for the total 4.2% lost between Friday and Monday.
London-traded Brent crude, the global benchmark for oil, settled up 87 cents, or 2%, at $43.32.
Despite the rebound, some analysts expressed concerns about the outlook for oil in the near term as France and the U.K. announced more Covid-19-related movement restrictions after a fresh surge in infections.
U.S. Treasury Secretary Steven Mnuchin said there was little chance of the White House agreeing with rival Democrats in Congress on an economic stimulus that would help financially distressed Americans.
“WTI crude seems destined to be stuck around the $40 a barrel level on dollar strength and demand uncertainty,” said Ed Moya, analyst at OANDA in New York.
“Oil will struggle to rally as the dollar seems poised to stabilize as the ECB seems positioned to deliver fresh stimulus a lot sooner than the Fed,” Moya said, referring to the European Central Bank and the U.S. Federal Reserve. “Demand uncertainty will remain in place until Europe and America get the virus spread under control.”
Oil traders will be on the lookout for industry data on weekly oil stockpiles due from the American Petroleum Institute at 4:30 PM ET (20:30 GMT).
Analysts have forecast a crude stockpile drawdown of 2.84 million barrels for the week ended Oct. 9, versus a build of 501,000 barrels in the previous week, due in part to data distortion by the recent Hurricane Delta.
The government-run Energy Information Administration will issue on Thursday official inventory data for last week.