On Wednesday U.S. crude-oil futures rose Wednesday ahead of U.S. inventory numbers, while Brent declined. Both oil benchmarks had settled higher on Monday.
On the New York Mercantile Exchange, crude futures for delivery in April CLJ5 climbed 26 cents, or 0.5%, $50.78 a barrel in the Globex electronic session.
However, Brent crude for April delivery on London’s ICE Futures exchange LCOJ5 was down 28 cents, or 0.5%, at $60.75 a barrel, although the contract moved off session lows.
Investors remain divided on whether the latest rally in prices, especially for Brent crude, can be sustained, as both benchmarks were higher on Monday.
“The main question is whether oil prices have started to bottom out, or whether it is too soon to make this call. We believe the latter,” ABN Amro said in a report, noticing that the recent price recovery is driven partly by speculation and nothing in the underlying oil fundamentals has changed in the past few weeks.
ABN Amro said oil prices could be put under pressure again as soon as demand for storage diminishes, economic data disappoints or oil production exceeds expectations.
The American Petroleum Institute trade group said late Tuesday that according to its data, U.S. crude inventories rose by 2.9 million barrels for the week ended Feb. 27. Inventory data from the U.S. Energy Information Administration is due later Wednesday, and analysts expect stockpiles to have risen by 4.6 million barrels.
During the first half of the year, oil prices are expected to remain low and volatile, with rapid crude inventory builds posing a major downside risk for the coming weeks, BMI Research, a unit of Fitch, said in a report.
Despite violence happened recently, Libyan oil production has risen in recent days, with the state-run National Oil Co. saying oil production is currently at around 500,000 barrels a day, up from an average of 325,000 barrels a day in January.
Oil markets are closely observing talks between Iran and the U.S., and other world powers, in Switzerland over Tehran’s nuclear program. The negotiations are at a critical stage, and have implications on sanctions over Iran’s oil exports.
In the meantime, Saudi Arabia on Tuesday increased the price differentials for its oil sold to customers in the U.S. and Asia in April. Traders said the monthly price adjustments reflect seasonally stronger refining margins and the recent rally in crude prices.