Meanwhile, the efficacy of OPEC's extended deal is disputed: File Image/Pixabay
Even though news that would normally be encouraging to the global crude sector has been reported steadily for the past week, it took the most fleeting of supportive disclosures - a decline in U.S. rig counts - for prices to finally escalate on Wednesday, by 2.3 percent in the case of an international benchmark.
Brent ended the session up $1.42, or 2.3 percent, at $63.82 per barrel, while West Texas Intermediate settled up $1.09 at $57.34 per barrel.
This is in stark contrast to Tuesday's session, when both benchmarks fell more than 4 percent on worries about a global economic slowdown even though the Organization of the Petroleum Exporting Countries (OPEC) had announced it would extend its production cutbacks for the remainder of the year and Russia reported cutbacks that went beyond its agreement with the cartel.
Olivier Jakob, founder, Petromatrix
The market is concerned about oil demand growth potential
But although the gains were said to be the result of the number of operational oil rigs dropping this week for the first time in three weeks (to 788) as well as major U.S. stock indexes finishing at a record closing high, gains were pared after data showed that U.S. crude inventories fell by 1.1 million barrels in the latest week - much less than the 3 million barrel decrease analysts had expected.
Plus, the crude market continues to be dogged by the usual worries: "We had a pretty sharp correction yesterday, so after that a little rebound is expected; globally, the market is concerned about oil demand growth potential," said Olivier Jakob, founder of Petromatrix.
Jakob also dismissed the efficacy of the extended OPEC deal, noting, "Extending the cut by six or nine months, it doesn't really matter if the level stays the same; if you really wanted to target stock levels, you would need deeper cuts, but Saudi Arabia has already gone beyond its cut target."
Ed Morse, global head of commodities for Citi, agreed: "The countries involved have no clear endgame other than to push back the inevitable time in which the age of supply abundance can no longer be held back."
Fueling the worry about declining crude demand as a result of waning economies was Barclays, which expects demand to grow at its slowest pace since 2011 (gaining less than 1 million barrels per day year-on-year in 2019); also, Morgan Stanley lowered its long-term Brent price forecast to $60 per barrel from $65 per barrel.
Arguably, the most disturbing news about commodities in general moving forward was delivered by Mary Ann Bartels, head of ETF strategy at Bank of America-Merrill Lynch; she told CNBC television that "I think one of the biggest risks that doesn't get talked enough about ... is that commodities have gone into a bear market, and what I mean by that is they've gone into a trading range that can last several more years.
"That means you get great rallies, but you also get great declines, and that the trend just tends to be flat."
Bartels also doubted that any imminent rally would be sustainable: "The supply dynamics of the oil market have changed dramatically, especially based on the technology here in the U.S. with fracking," and as such, "energy is not necessarily one of our top picks" in this market.