Oil prices steady, awaiting confirmation of surprise U.S. inventory build

Brent crude futures were down 2%, or 71 cents at $34.03 per barrel

  
Image used for illustrative purpose. A pump jack operates in the Permian Basin oil production area near Wink, Texas U.S. August 22, 2018.

Image used for illustrative purpose. A pump jack operates in the Permian Basin oil production area near Wink, Texas U.S. August 22, 2018.

REUTERS/Nick Oxford

LONDON- Oil futures steadied on Thursday as the market awaited confirmation of industry data that showed a surprise increase in U.S. crude stocks, which offset hopes for a demand recovery as coronavirus lockdowns ease.

After tumbling on Wednesday, Brent crude futures were down 0.06%, or 2 cents, at $34.72 a barrel at 1311 GMT after dropping by more than $1 to $33.62 in early trade.

U.S. West Texas Intermediate (WTI) crude futures were down 0.3%, or 10 cents, at $32.71. U.S. futures earlier slipped as much as 5% to a low of $31.14.

"All in all oil is pretty much flat after the price correction yesterday. The market opened lower after the shock API numbers, but it is now treading water until EIA statistics are released," said Harry Tchilinguirian, head of commodity research at BNP Paribas.

Data from industry group API showed U.S. crude stocks rose 8.7 million barrels in the week to May 22, against analyst expectations for a 1.9 million-barrel draw.

Also weighing on prices was uncertainty about Russia's commitment to continuing deep output cuts ahead of a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, a grouping dubbed OPEC+.

Saudi Arabia and some other OPEC oil producers are considering extending record high output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.

Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed during a telephone call on further "close coordination" on output restrictions, the Kremlin said on Wednesday. 

With WTI holding above $30 a barrel, OPEC+ will be watching to see whether U.S. shale oil producers, who have breakeven prices in the high $20 to low $30 range, step up production, said National Australia Bank's head of commodity research, Lachlan Shaw.

(Additional reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Susan Fenton, David Goodman and Jan Harvey) ((koustav.samanta@thomsonreuters.com)(+65 6870 3503)(Reuters Messaging: koustav.samanta.thomsonreuters.com@reuters.net))

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