Crude oil futures rose Friday morning in European trading, shaking off an enormous stock build in the US, as analysts said bearish news was priced in and the market was expecting OPEC and its partners will once again cut output.
At 1135 GMT, December ICE Brent Crude futures were up $1.18 to $67.80/b, while the NYMEX November light sweet crude contract was 88 cents higher at $57.34/b.
"Yesterday's price reaction to the US inventory data shows that negative news is now largely priced in," Commerzbank analysts said in a note. "This is the only way to explain why an increase in US crude oil stocks of a good 10 million barrels failed to put further pressure on prices."
In the week to November 9, US crude inventories rose 10.27 million barrels to 442.05 million barrels, according to data from the US Energy Information Administration released on Thursday. Those figures exceeded both estimates from analysts and the numbers reported earlier in the week from the American Petroleum Institute, which reported a build of 8.8 million barrels for the same period.
That build marks a 48-week high on the back of record high production and slower refinery runs, and was the eighth-straight week of stock gains.
Even still, after a largely bearish week for crude, prices have not been shaken by the build and instead have even risen, finding support in part from expectations that OPEC and other partners will bring back production cuts to dampen a supply surplus going into 2019, including on the back of comments from Russian president Vladimir Putin.
"It is obvious that we need to cooperate with Saudi Arabia, and we are going to cooperate with Saudi Arabia. OPEC plus have been very positive, and we see that in the market situation," Putin told reporters in Singapore on Thursday. Last weekend, Saudi energy minister Khalid al-Falih said OPEC "will do what it takes" to keep the oil market balanced. However, the volatile swings in prices this week mean that individual news developments are failing to have a predictable outcome on crude markets.
"The main risk for the weekend is to have another headline from an "OPEC source" saying that OPEC is considering supply cuts," said Olivier Jakob from Petromatrix. "There has been however a series of such headlines already, hence their surprise premium is diminishing."
Friday will bring new signals on the pace of US output, with the weekly release of the Baker Hughes rig count data, and next week will bring American Thanksgiving, which will keep US traders out of their desks for large parts of the week.
