Brent crude, the global benchmark, rose 59 cents, or 1% to $60.79 US mid-morning Wednesday. For a second consecutive session, the markets are trading inside last Friday's wide range which tends to indicate trader indecision and impending volatility.
Despite the inventory reversal - and OPEC+ agreement to cut production in H1 2019 - crude prices remain 30 percent down from beginning October. U.S. West Texas Intermediate crude futures were at $52.16 U.S. per barrel, up 51 cents, or 1%.
Prices rose almost one-percent earlier in the session, but the big wave of buying that could've triggered a breakout to the upside failed to materialize.
"Volatility will be high in the near future, but going into 2019, we are constructive on oil prices", Hootan Yazhari, head of global frontier markets equity research at Bank of America Merrill Lynch, told CNBC's Dan Murphy on Tuesday. That can set the stage for prices to climb, especially if there's unexpected, sharp rise in demand for oil, say in the event a major hurricane strikes production facilities or a key port. Over the week-end, local militia seized the country's biggest oil field, El Sharara.
Yet it seems the relentless increase in USA production is countering these tailwinds.
U.S. crude oil production decreased in the week ending December 7, the U.S. Energy Information Administration (EIA) said in a report on Wednesday.
January natural gas NGF19, +0.46% climbed by 1.5% to $4.198 per million British thermal units, looking to recoup some of its losses from Wednesday, when it dropped 6.2% to settle at $4.136-the lowest since November 15, according to FactSet data.
Interior secretary latest high-profile Trump admin departure
For the moment, Democrats like Senate Minority Leader Charles Schumer of NY were eager to crow about the latest departure. The company has an interest in Department of Interior decisions on whether to open public lands for drilling.
In the United States, nationwide inventories declined by 10.2 million barrels in the week ended December 7, the API was said to report. Analysts were expecting a build of 2.461 million barrels for the week.
The IEA has maintained its forecast for oil demand growth in 2019 at 1.4 million bpd, which is higher than Opec's projection of 1.29 million bpd.
The United States, where crude production has hit a record 11.7 million bpd, is set to end 2018 as the world's top oil producer, ahead of Russian Federation and Saudi Arabia. It added that the nation's annualized average output would be 10.88 million bpd over the year.
Oil remains sideways as energy traders await a decline in USA or OPEC production. "We envisage a Brent price of $70 per barrel at the end of 2019, and indeed at the end of 2020", said commodities analysts at Commerzbank, in a note.
Still, oil demand growth is slowing, OPEC said.
In a sign that China is willing to lessen the trade tensions with United States, the country made its first major U.S. soybean purchases in more than six months on Wednesday, helping investors breathe a sigh of relief across broader stock markets, and pushing oil prices up.
I won't be surprised by a short-covering rally.