Crude oil prices rose by more than 2% on Friday, recovering part of the loss from the previous session, but worries about growing US stockpiles continue to keep markets under pressure.
The futures on the Brent oil rose by 2.14% to 53.86 USD per barrel. For its part, the US light crude WTI increases its price by 2.49% to 45.72 USD per barrel.
Meanwhile, February natural gas futures dropped by 1.8% to 3.487 USD per million British thermal units.
The growth comes as the value of crude oil has written off a significant portion in recent days. On Monday, both varieties wiped out about 5% of their price. The crude oil reached its lowest price in nearly a year on Thursday, the day after their biggest one-day rally in two years, dragged down by worries about the global economy and market saturation.
The worries about the global economic slowdown are weighing on stock market movements and oil prices are not relieved of these concerns.
Investors have been wrestling with growing fears that a deterioration in appetite for so-called risk assets from oil to stocks was signalling ebbing economic expansion, suggestive of a bearish environment for oil demand.
US oil inventory
The American Petroleum Institute reportedly said crude oil saw an inventory build of 6.9 million barrels for the week ending December 21, which was above estimates for a build of 2.869 million. The Energy Information Administration will release its official report at 11 a.m. Eastern Time Friday. Both inventory reports are delayed because markets were closed for Christmas on Tuesday.
The API also reportedly said gasoline inventories saw a 3.7 million-barrel build for that week.
Market participants have grown worried about an oversupply of crude. Three months ago it looked as if the global oil market would be undersupplied through the northern hemisphere winter as US sanctions removed large volumes of Iranian crude. But other oil exporters have compensated for any shortfall, filling global inventories and depressing prices.
OPEC met earlier this month with other producers including Russia and agreed to reduce output by 1.2 million barrels per day, equivalent to more than 1% of global consumption.
Meanwhile, Russian energy minister Alexander Novak said on Thursday that the growing protectionism and unpredictability of the US administration have contributed significantly to global oil volatility over the past two years.
Alexander Novak also said that Russia intends to cut its crude oil production by between 3 and 5 million tonnes in the first half of 2019 under the agreement between OPEC producer countries and their allies, which comes into force in January.
Saudi Arabia will likely move to cut its oil output in order to prop up crude prices, following the OPEC agreement. The Kingdom had already dropped significantly the yields in December, due to economic and business considerations.
However, the United States has become the largest crude oil producer, gaining 11.6 million barrels per day – more than Saudi Arabia and Russia.
Meanwhile, Western Canadian oil production outstripped export pipeline capacity by about 365,000 barrels per day. The industry marks significant growth in the country during the last months, raising important questions about the exports infrastructure.