Oil rose after a technical gauge signaled recent declines were overdone, while a US government report showing a drop in domestic crude inventories helped ease oversupply concerns.
West Texas Intermediate futures rose about 2.2% to settle above $58 a barrel, signaling a corrective phase following a roughly week-long stint in oversold territory on the relative-strength index. Brent futures rose 2.1% to settle below $63.
Prices extended gains in thin post-settlement trading after US Treasury Secretary Scott Bessent announced a “substantial” increase in sanctions related to Russia within the next day. The possibility of further disruption to Russian oil flows are lending support to a market otherwise bracing for a supply glut.
Earlier in the session, the futures also received support from government data that showed total US petroleum stockpiles declined by about 4.2 million barrels to reach the lowest since late September. The no-surprises report was also generally in-line with a closely followed industry forecast by the I.
“While the release isn’t likely to change the broader consensus that large builds are imminent, it does help the market hold recent gains,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “That said, it’s not a strong catalyst for further upside, as many traders still believe sizable builds are just around the corner.”
Oil still remains on track for a third monthly loss as signs of a global surplus put downward pressure on prices, though that’s provided an opportunity for the Trump administration to buy crude for strategic reserves. The US plans to purchase 1 million barrels for delivery in December and January.
On Wednesday, oil perked up on a report the US and India are nearing a trade deal that would see the South Asian nation gradually reduce imports of Russian crude, boosting demand for alternative supplies. India’s refiners have previously indicated they would trim, but not stop, such imports.
Adding to the bullish sentiment, European Union leaders are expected to greenlight a 19th Russia sanctions package on Thursday, after Slovakia dropped objections. Russia on Wednesday launched multiple drone and missile strikes on Ukraine as the latest peace attempts by US President Donald Trump appeared to be floundering. The impact of those moves on Russian flows still remains uncertain.
The premium that front-month WTI futures command over the next month’s contract, known as the prompt spread, has narrowed in the past few months but still signals tight short-term supplies in a price structure known as backwardation. That’s also true for Brent crude.
To get Bloomberg’s Energy Daily newsletter in your inbox, click here.
With assistance from Rong Wei Neo and Christopher Charleston.
This article was generated from an automated news agency feed without modifications to text.