Oil shrugs off US inventory build

Oil prices fell sharply as the knee-jerk reaction to EIA report on US inventories, which showed an unexpected build, but quickly bounced back and reached fresh daily highs.

Oil fell below $50 a barrel and hit a low of $49.70 a barrel before quickly overshooting previous levels and hitting a daily high of $50.90 a barrel. It was last trading at $50.62/bbl, up 0.59% on the day.

The US Energy Information Administration (EIA) reported that domestic crude inventories rose by 4.9 million barrels in the week ended Oct. 7, above the 650,000-barrel increase expected. The EIA had reported surprise inventory falls in each of the previous 5 weeks. 

Meanwhile, gasoline supplies dropped by 1.9 million barrels, while distillate stockpiles fell by 3.7 million barrels. On Wednesday, the American Petroleum Institute (API) reported a rise of 2.7 million barrels. 

Prices were already under pressure, after the latest OPEC monthly report showed on Wednesday the cartel’s output rose more than 33 million barrels per day during September , an 8-year high, mitigating the optimism around a potential output freeze that should be confirmed at the next meeting in Vienna later in November.