Brent crude settled up 3 cents at $66.79 a barrel, strengthening late in the session after earlier hitting a low of $65.27 a barrel. U.S. crude futures traded 30 cents higher at $56.76 a barrel in a session that saw swings in a $2 per barrel range.
The market is struggling to find firm footing after a rout that has seen prices fall more than $20 a barrel since early October on global oversupply fears. The market needs a steady drumbeat of negative pressure to move down further, said Gene McGillian, director of energy research at Tradition Energy in Stamford, Connecticut. Weve seen a significant exodus of a lot of the speculative length in the market.
The market pared losses early in the U.S. trading day when energy information provider Genscape reported that crude inventories fell in the latest week, traders said. It then strengthened further into the close.
EU foreign ministers endorsed a French government decision to sanction Iranian nationals accused of a bomb plot in France, diplomats said. That could take additional oil off the market from OPEC member Iran. U.S. sanctions on Iran, which were put in place in November, have taken less oil off the market than anticipated as the U.S. has granted waivers to some of Irans oil customers.
The Organization of the Petroleum Exporting Countries is pushing allied producers including Russia to join in output cuts of 1 million to 1.4 million barrels per day.
Russian Energy Minister Alexander Novak said Russia planned to sign a partnership agreement, and that details would be discussed at OPECs Dec. 6 meeting in Vienna.
For a cut to be successful in supporting the market, theyre going to have to present a front that is not fractured and the chance of that is looking less and less likely as Dec. 6 approaches, said Bob Yawger, director of energy futures at Mizuho in New York.
While a large cut would support crude futures, clear signals from producers are needed, Yawger said. We lack any certainty other than that the market is oversupplied in the U.S. and everybody else is trying to deal with it.
U.S. crude stockpiles have grown for eight straight weeks, and data last week showed inventories swelled by the most in more than a year.
Brent is almost 25 percent below early Octobers 2018 peak of $86.74 on evidence of slowing global demand while output from the United States, Russia and Saudi Arabia hit historic highs.
Oil prices rose (last week) on hope OPEC and partners will act to reverse bearish sentiment, but from a technical set up, bear mode remains intact, OANDA strategist Stephen Innes said.
A trade war between the United States and China has made investors warier about the outlook for oil demand growth.
(Graphic: U.S. oil drilling points to more output -tmsnrt.rs/2Q97LFW)
This month, fund managers cut their bullish exposure to crude futures and options to the lowest since around mid-2017.
Weekly exchange data shows money managers hold a combined net long position equivalent to around 364 million barrels of U.S. and Brent crude futures and options, down from over 800 million barrels two months ago.
The main trend remains bearish as investors no longer believe in a risk of supply tightness for crude, ActivTrades chief analyst Carlo Alberto De Casa said.
Additional reporting by Henning Gloystein in SINGAPORE and Amanda Cooper in LONDON; Editing by David Gregorio and Phil Berlowitz
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