The oil complex rebounded in midmorning trading Wednesday in the wake of reports suggesting that OPEC may cut more production than previously thought.
ICE January Brent was up $1.32 at $66.79/b and NYMEX December WTI was up $1.08 at $56.77/b.
On Wednesday morning, Reuters reported that OPEC may consider cutting production by up to 1.4 million b/d. Earlier this week, Saudi Arabian Energy Minister Khalid al-Falih said OPEC and its partners would need to cut at least 1 million b/d from October's output levels in order to avoid oversupply.
In addition to floating a larger potential production cut, Wednesday's report was bullish in that it sets OPEC on a collision course with US President Donald Trump.
On Monday, Trump called for OPEC and its partners to uphold higher production levels, sending oil markets sharply lower over the past two sessions.
"The market was saying that OPEC may not have the guts to stand up to the president, who basically has been dictating OPEC policy with his Twitter account," Price Futures Group senior market analysts Phil Flynn said in a morning note.
But Wednesday's report signaled that OPEC may be willing to push back on pressure from Washington in order to stabilize the market.
Technical fundamentals also lent support to oil markets on Wednesday. Brent and WTI settled under the lower Bollinger Band line in oversold territory on Tuesday, according to data provider MarketView. Crossing the lower band is a technical indicator suggesting prices may be oversold and typically correlates with a move higher in subsequent sessions.
But this rebound is often a short-lived response to purely technical factors, and may not indicate that markets are poised for a sustainable move higher.
The lower Bollinger Band for both contracts has raced downward in recent weeks, preventing prompt-month price levels from crossing it despite steep declines. Brent and WTI last crossed this threshold on October 23, three days prior to their last up session on October 26.
Distillate futures spiked on Wednesday as freezing weather and a winter storm descended upon the US Northeast. NYMEX December ULSD was up 5.23 cents at $2.1148/gal. Gasoline futures also gained, and NYMEX December RBOB was 2.83 cents higher at $1.5710/gal.
