Oil rebounds, shrugging off U.S. stockpile build

Crude oil futures rose in Asian trade on Thursday, shrugging off a surprise build in U.S. inventories as some Chinese traders returned after week-long National Day holidays.

U.S. crude stocks rose by 3.1 million barrels to 461 million last week as refineries reduced production and idled capacity. Analysts had expected an increase of 2.2 million barrels.

Both major oil benchmarks rose more than 1 percent on Thursday although trading was thin.

U.S. crude was up 30 cents at $48.11 at 0628 GMT and traded as high as $48.39 earlier. The contract fell 1.5 percent on Wednesday after three days of gains.

Brent crude, the global oil benchmark, was up 43 cents at $51.76 a barrel and rose to as high as $51.89 in earlier trading. The contract fell 1.1 percent on Wednesday.

Further support for prices may come as more traders from China return to work, Philip Futures in Singapore said in an emailed note.

“With China’s public holidays ending, we would likely be seeing Chinese oil traders coming back to take positions on the rally from the past few days,” it said.

With little data out this week, apart from industry and government inventory numbers in the U.S., and China on holiday for the first three days, the market has focused on longer-term demand trends that have supported prices.

A U.S. Energy Information Administration report on Tuesday predicted global oil demand for 2016 would rise by the fastest rate in six years, suggesting the crude surplus that has pushed prices down about 50 percent since June last year is easing faster than expected.

“That is where we have seen a little bit of a pick-up over the last couple of sessions, but ever so slightly back to reality over the last 10 or 12 hours,” said Ben le Brun, market analyst at OptionsXpress in Sydney.

Source: Reuters