Oil prices began to rebound Wednesday from Tuesday’s plunge as investors weigh concerns that global output could outstrip demand against potential supply cuts from the Organization of the Petroleum Exporting Countries and its allies.
Light, sweet crude for December delivery was recently 2.4% higher at $57.04 a barrel on the New York Mercantile Exchange. Brent crude was up 2.1% at $66.87 a barrel.
WTI had its steepest plummet in over three years on Tuesday, closing down 7.1% at its lowest price this year, and marking a record 12th day of declines, while Brent closed down 6.6%. Both benchmarks have slid roughly 25% since reaching four-year highs at the start of October, leaving them well into a bear market, which is roughly defined as a 20% decline from a recent peak.
OPEC and its allies outside the cartel, led by Russia, signaled Sunday they could decide in December to hold back output by around 1 million barrels a day, amid signs the market will be oversupplied in 2019.
That prospect bolstered prices as the start of the week, before President Trump sent out a tweet criticizing any cut by the Saudis and OPEC, triggering a renewed selloff.
“OPEC’s failure to respond to Trump’s remarks yesterday generated additional uncertainty,” Commerzbank analysts said Wednesday in a note. “Clearly market participants want to test OPEC’s pain threshold. The high trading volume suggests that speculators have squared further long positions and/or built up short positions.”
The International Energy Agency warned Wednesday that global oil supply was on pace to significantly outstrip demand, as Russia, Saudi Arabia and the U.S. are pumping out crude at record levels.
Ole Hansen, head of commodity strategy at Saxo Bank, said the report had a silver lining, with the IEA reiterating its demand growth forecast for this year and next, at 1.3 million barrels a day and 1.4 million barrels a day, respectively.
That forecast contrasted with OPEC’s monthly oil market report, released Tuesday, which predicted a slowdown in global demand growth by 40,000 barrels a day this year and 70,000 barrels a day next year.
“Given the most recent price declines and the mounting consensus on a more problematic fundamental situation for 2019, the onus will be on OPEC to come up with some kind of constructive outcome next month,” analysts at consulting firm JBC Energy said in a note Wednesday.
OPEC and its allies are set to gather in Vienna starting Dec. 6.
Investors and analysts are looking ahead to weekly U.S. oil inventory data Thursday from the Energy Information Administration, as well as data Friday from Baker Hughes on the number of rigs drilling for oil in the U.S.
—Dan Molinski contributed to this article.
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