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Oil gains as traders buy at bottom after US glut

London - December futures rose as much as 1.1 per cent to $45.71 a barrel in New York.

Oil climbed from a three-week low as traders snapped up contracts dragged down by expanding US inventories.
December futures rose as much as 1.1 per cent to $45.71 a barrel in New York. They dropped to $45.20 on Wednesday after US government data showed stockpiles expanded by 8.03 million barrels last week, the biggest increase since April and more than twice the gain forecast.
"There was a perfect excuse yesterday to send oil through $45 after the bigger-than-expected rise in inventories," Ole Sloth Hansen, an analyst at Saxo Bank, said by e-mail from Copenhagen. "That did not happen and it could potentially signal that traders are looking to pick up contracts at the bottom of the range that has prevailed since early September."
Oil failed to sustain a gain above $50 a barrel earlier this month amid signs the market surplus will persist. US inventories remain more than 100 million barrels above the five-year seasonal average as the country's refinery utilisation rate hovers near the lowest since January. In the Organisation of Petroleum Exporting Countries, member states continue to pump above their quota while Iran prepares to ramp up output once sanctions end.
"No one is ready to slow production at this stage," Hansen said.
A meeting between officials from Opec and oil producers outside the group including Russia didn't discuss restrictions on crude output or setting a target range for prices, Ilya Galkin, the Russian Energy Ministry's head of international relations, said in Vienna on Wednesday. In September Russia beat Saudi Arabia to become the biggest seller of crude to China.
West Texas Intermediate for December delivery was at $45.58 a barrel on the New York Mercantile Exchange, up 38 cents, at 10:48am London time. The volume of all futures traded was about 44 per cent below the 100-day average.
Brent for December settlement advanced 37 cents, or 0.8 per cent, to $48.22 a barrel on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of $2.64 to WTI.
US crude stockpiles rose for a fourth week through October 16, the longest run of gains since April, the Energy Information Administration reported on Wednesday. The 8.03 million-barrel jump compares with a 3.75 million-barrel increase forecast in a Bloomberg survey. Production remains unchanged at 9.1 million barrels a day.
Refinery utilisation in the world's biggest economy rose 0.4 percentage points to 86.4 per cent after slipping to the lowest level since January in the week ended October 9, according to the EIA.
"Processing rates at US refineries are near the lowest this year, driving stockpiles to gain quite significantly," Hong Sung Ki, a commodities analyst at Samsung Futures, said by phone. "Seasonally speaking though, it is common to see inventories peak in end-October as it's the off-season." - Bloomberg
Venezuela, whose economy is reeling after oil slumped more than 40 per cent over the past year, has long urged fellow Opec members to curb production to boost prices. An 'equilibrium' of about $88 a barrel is necessary to ensure that enough new supplies are developed to offset an annual decline in global output of about 10 per cent, Venezuela's Oil Minister Eulogio del Pino said on Wednesday, also proposing a meeting of oil-producing nations' heads of state next month.
More technical meetings will be necessary to clarify the Venezuelan proposal before such a summit, Russia's Galkin said. "We need two, maybe three technical preparatory meetings to study the proposal more in detail and depth," he said.