(Bloomberg) — Oil advanced from a four-month low as traders tried to establish a price floor after several days of declines.
West Texas Intermediate rose after five straight days of losses, hovering near $74 per barrel. The market had entered oversold territory as a result of OPEC+’s plan to boost supply in October. Prices edged lower earlier in the session after US Energy Information Administration reported that US crude stockpiles expanded by 1.23 million barrels.
“It’s pretty surprising that crude is holding up given the size of the build,” said Matt Sallee, president and senior portfolio manager at Tortoise Capital Advisors LLC. “But crude prices have already dropped quite a bit in the last several days, so that’s providing a little bit of a floor.”
Oil has tumbled around 4% this week following a decision by OPEC+ on Sunday to start unwinding supply cuts in the fourth quarter, despite concerns about demand and higher output from outside of the group. Traders who rely on trend-following algorithms compounded the selloff.
While the Organization of the Petroleum Exporting Countries and its allies may have spooked the market with their decision, RBC Capital Markets LLC predicts the Saudi-led group will “hit the kill switch” on returning supply if weakness persists. Most analysts had expected OPEC+ to extend curbs through year-end.
The group is already hinting at concern about consumption. Saudi Aramco, the largest producer in OPEC+, lowered prices for oil delivered to Asia amid doubt about the strength of demand.
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