NEW YORK: Oil prices rose about $1 a barrel on Wednesday, recovering somewhat from a sharp selloff during the previous session, after U.S. data showed strong demand for refined products.
Sentiment remained negative, however, as investors grappled with weakening demand and worries about oversupply.
Brent crude futures rose 97 cents, 1.7 percent, to $57.23 a barrel, by 12:57 p.m. EST (1757 GMT). The front-month U.S. light crude contract, which expires on Wednesday, rose $1.56, or 3.4 percent, to $47.80 a barrel. The second-month contract rose $1.33 a barrel.
Crude inventories fell by 497,000 barrels in the week to Dec. 14, smaller than the decrease of 2.4 million barrels analysts had expected. The decline was the third consecutive decrease, the U.S. Energy Information Administration said.
Distillate stockpiles, which include diesel and heating oil, fell by 4.2 million barrels, versus expectations for a 573,000-barrel increase, the EIA said. Distillate demand rose to the highest since January 2003, which bolstered buying, particularly in heating oil futures, the market's proxy for diesel.
Heating oil futures gained about 3 percent to $1.807 a gallon.
“The complex is piecing together a modest advance so far today but only one that offsets a miniscule portion of recent losses," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
The markets slumped on Tuesday, extending recent declines. Global benchmark Brent tumbled to a session low of $55.89 a barrel, the lowest since October 2017. WTI sank to $45.79, the weakest since August 2017.
Broader financial markets have been under pressure on worries that higher U.S. interest rates could slow domestic growth.
The Federal Reserve is expected to raise interest rates on Wednesday as it winds up a policy meeting, with a decision set to be announced at 2 p.m. EST (1900 GMT).
Both Brent and WTI have fallen more than 30 percent since the beginning of October as crude supply has increased.
The Organization of the Petroleum Exporting Countries and other oil producers including Russia agreed this month to curb output by 1.2 million barrels per day (bpd) in an attempt to drain tanks and boost prices.
But the cuts will not happen until next month and production has been at or near record highs in the United States, Russia and Saudi Arabia.
Russian oil output has been running at a record 11.42 million bpd so far this month, an industry source told Reuters.
Saudi Arabia's energy minister, Khalid al-Falih, said on Wednesday he expected global oil stocks to fall by the end of the first quarter.