Oil prices rebounded in early trading on Friday, bouncing off two-month lows hit in the previous session when prices fell 5 percent on news that the U.S. weekly crude draw missed some forecasts.
Traders said that the outlook looked volatile as a refined product glut and slowing economic growth weighed on markets while the risk of supply disruptions could tighten supplies.
International Brent crude oil futures were trading at $46.95 per barrel at 0027 GMT on Friday, up 55 cents, or 1.19 percent, from their last settlement. U.S. West Texas Intermediate (WTI) crude was up 43 cents, or 0.95 percent, at $45.57 a barrel.
The bounce came after a 5 percent fall in prices the previous sessions, to two month lows, after the U.S. government reported a weekly draw in crude oil inventories that was lower than many analysts had expected.
“The oil price fell to its lowest level in almost two months after an EIA report showed that inventories fell by less than expected. The EIA report said crude supplies fell 2.22 million barrels (524.35 million barrels) to in the week ended July 1,” ANZ bank said on Friday.
Traders said that the price fall in the light of an inventory reduction had been an overreaction.
“Crude stocks have now fallen for almost two months straight, that doesn’t warrant the price falls we saw yesterday, so this morning there was a correction,” one oil trader said.
Beyond the short-term, traders said that the outlook would likely be choppy as the threat of supply reductions could tighten markets while an ongoing glut in refined products, especially in Asia and North America, as well as slowing economic growth weighed on oil