Investing.com - Oil bears seem to be fearing OPEC, finally, suggesting the brakes might hold on the longest selloff streak in crude.
The U.S. government announced on Thursday the biggest weekly crude stock build in 21 months, a figure that came in three times above trader expectations.
Yet, West Texas Intermediate and Brent crude futures rose, halting for a second-straight day the previous 12-day rout on the market triggered by unexpected U.S. waivers on Iranian oil sanctions and other oversupply concerns.
U.S. WTI settled up 21 cents, or 0.4%, at $56.46 per barrel, extending the rebound from the previous session after Tuesday's 7% plunge that sent it a one-year low of $55.11. Despite the rebound of the past two days, WTI remains about 27% lower from four-year highs of nearly $77 hit in early October.
Brent was up 50 cents, or 0.8%, at $66.62 per barrel by 3:00 PM ET (20:00 GMT). Like WTI, Brent also fell almost 7% on Tuesday, reaching an eight-month low of $66.67. With the recovery, it remains some 23% lower from its peak of nearly $87 six weeks ago.
"No one's shorting the market at this point because everyone's looking at OPEC and at what the Saudis might do if the prices go any lower," said John Kilduff, partner at New York energy hedge fund Again Capital.
"The Saudis have the power to rescue this market. They went from announcing a million barrels in cuts initially to 1.4 million barrels over a matter days. There's the stirrings of a reaction coming and no one wants to be caught on the wrong side."
OPEC, which meets on Dec. 6 in Vienna for its policy-setting meeting, is widely expected to agree on cuts of around 1 million bpd or more from its current production of above 33 million bpd.
Russia and other key allies are scheduled to hold talks with the cartel a day later to determine the wider alliance's contribution to any market-balancing strategy.
The Saudis, who are "very angry" with U.S. President Trump for triggering the market's collapse by issuing generous waivers on Iranian oil sanctions, were pushing for cuts of as much as 1.4 million bpd with all the producers on board, Reuters reported Thursday.
But Russia wasn't thrilled to go along with such a high output cut, Reuters said. Russian President Vladimir Putin declined to give a direct answer when asked by reporters in Singapore.
That made some traders skeptical about Thursday's rebound.
"We do expect it to be rather short-lived," said Tariq Zahir at Tyche Capital Advisors in New York.
Crude inventories in the United States rose by nearly 10.3 million barrels last week, the most for a week since Feb. 15, 2017, data from the Energy Information Administration (EIA) showed on Thurday. The market had been anticipating a build of just 3.2 million barrels in the latest week.
U.S. crude stockpiles have risen by about 48 million barrels over the past eight weeks. At 442.1 million barrels in total, crude oil inventories stand about 5% above the five-year average for this time of year, the EIA said.
September through October is typically maintenance season for U.S. refiners, explaining some of the builds. But the EIA said refineries were still operating at just above 90% of capacity, vs. closer to 100% earlier in the year.
"It's a sign that perhaps low gasoline margins are causing refiners to rein in runs," said Matthew Smith of New York-based crude cargoes surveyor Clipperdata.
Weekly stockpiles growth isn't the only thing worrying traders.
Total U.S. crude production itself now stands at a record 11.7 million bpd, the EIA said, making the nation the world’s biggest oil producer ahead of Russia and Saudi Arabia.