Oil recovers from shock of US inventory build-up

Crude oil prices managed a partial recovery after sinking by more than $2 on Thursday after US inventories data showed an unexpectedly broad deterioration in demand conditions.

Nymex December West Texas Intermediate rose 46 cents to $77.40 a barrel, while ICE December Brent added 73 cents at $76.75 a barrel.

US crude stocks rose 1.8m barrels last week, well above the consensus forecast for an increase of 600,000 barrels.

Refiners’ need for crude has fallen because of poor profit margins and weak demand from end users.

More than one-fifth of US refining capacity now lies idle with refinery utilisation dropping 0.7 percentage points to 79.9 per cent.

Petrol stocks rose 2.5m barrels last week compared with the consensus forecast for no change.

Demand weakened, sinking below the key 9m barrels-a-day level to an average 8.92m b/d over the past four weeks, down 1 per cent compared with the same period a year ago.

Distillate stocks (including heating oil) rose 300,000 barrels, confounding the consensus forecast for a drop of 700,000 barrels because of colder weather.

Distillate stocks stand more than 30 per cent higher than a year ago and demand remains dismal, averaging 3.56m b/d over the four weeks, down 13.8 per cent compared with the same period a year ago.