NEW YORK (Reuters) - U.S. crude prices were little changed on Wednesday in choppy trade, even as record high U.S. crude and gasoline inventories fed concerns about a glut.
The bearish pressure from the U.S. government data was offset by evidence that OPEC and other producing countries were complying with agreed-upon supply cuts.
“There’s a certain resilience in price - forward expectations that we are going to reduce supplies globally is holding the market,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. The market has been supported in a $50 a barrel to $55 a barrel range by the expectation of output cuts.
Still, McGillian said, more evidence of market rebalancing is needed to maintain prices in this range.
“We saw utilization rates drop but didn’t see a corresponding drop in gasoline inventories which indicates that demand may not be as steady as people have expected, and still the market holds,” he said.
U.S. crude stocks soared by 9.5 million barrels last week, the U.S. Energy Information Administration (EIA) said, nearly three times more than forecast. Late on Tuesday, a trade group had also reported a larger-than-expected build.
U.S. crude inventories hit a peak at 518.12 million barrels, the EIA said. Gasoline stocks also touched a record, rising 2.8 million barrels to 259.1 million barrels.
Brent crude LCOc1 futures fell 9 cents to $55.88 a barrel at 2:13 p.m. (1913 GMT), while U.S. crude CLc1 futures rose 1 cent to $53.21 a barrel. Prices had whipsawed after the EIA data.
“The U.S. witnessed yet another week of higher-than-expected stock builds; nonetheless, the build was less than last week’s, which helped prices recoup some of the earlier losses,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.
“A build in gasoline stock is in tandem with seasonal norms and further builds are expected in the coming weeks as demand for the fuel remains low.”
Gasoline inventories have surged 10 percent since the end of 2016, EIA data showed. Last week, stockpiles of the fuel swelled to a record 259 million barrels.
The dollar weakened, which also helped support greenback-denominated oil.
The Organization of the Petroleum Exporting Countries and other producers, including Russia, are cutting output by almost 1.8 million barrels per day in the first half of 2017. OPEC in January delivered record compliance of over 90 percent with its output curbs, according to estimates from the International Energy Agency and figures collected by OPEC’s headquarters. <OPEC/M>
Still, a report by BMI Research said a compliance rate of just 40 percent by Iraq, OPEC’s second-biggest producer, “could prove problematic to group cohesion.”
Also, Russia and the other non-OPEC producers have delivered smaller cutbacks. The oil minister of Oman, one of the participating non-OPEC countries, said he expected compliance to improve.
Additional reporting by Devika Krishna Kumar in New York, Henning Gloystein in Singapore and Alex Lawler in London; Editing by Meredith Mazzilli and Alan Crosby