"Where's The Glut?" Flynn Asks As Massive Stock Draw Buoys Oil Prices

But Bloomberg maintains the oversupply narrative: File Image/Pixabay

A significant U.S. stockpile draw, reported in the previous session and confirmed on Wednesday by the Energy Information Administration, was enough to dent bearish sentiment - albeit fleetingly - and cause a mild rise in oil prices.

Brent settled up 52 cents at $64.92 per barrel, while West Texas Intermediate settled 33 cents at $60.48.

The EIA reported that crude inventories fell by nearly 7 million barrels, compared with expectations for a 211,000 barrel draw; gasoline and distillates also dropped, and data showed strong implied  demand.

This compelled some analysts to question, as they had in the previous session, persistent warnings of a global oil glut – something that has dogged trading for months now.

Phil Flynn, senior market analyst at Price Futures Group Inc., said, "Where's the glut? The longer the glut doesn't hit, the more we will question whether it exists."

Two other factors supported oil on Wednesday: the U.S. Federal Reserve cut interest rates by 25 basis points and expectations were high for another cut in December; also, U.S. president Donald Trump predicted a good outcome in advance of his trade talks with China president Xi Jinping, which will take place on Thursday in South Korea.

The sanctions against Russia were apparently of secondary interest to oil analysts on Wednesday, with Standard Chartered analysts including Emily Ashford stating in a note, "The market is now trying to assess the longer-term impact of the additional sanctions, which will be determined by the quantity of actual barrels removed from supply."

For its part, Bloomberg wasn't swayed by oil's recovery on Wednesday; the news agency reiterated the familiar narrative by noting that the commodity "is on track to notch a third monthly decline, with prices dragged lower by expectations of a global surplus as OPEC+ raises production…..key alliance nations are set to hold discussions this weekend and may sign off on another supply increase."