Oil prices edged higher on Wednesday as hopes that OPEC and its allies will delay a planned rise in oil output offset demand fears stoked by a bigger-than-expected build in US crude stocks and weaker US retail sales.
Brent crude futures for January rose 22 cents, or 0.5%, to $43.97 a barrel by 0733 GMT, while US West Texas Intermediate crude for December climbed 6 cents, or 0.1%, to $41.49 a barrel.
To tackle weaker energy demand amid a new wave of the Covid-19 pandemic, Saudi Arabia called on fellow members of the OPEC+ grouping - OPEC and other producers including Russia - to be flexible in responding to oil market needs as it builds the case for a tighter production policy in 2021.
"Hopes that OPEC+ will keep existing cuts further into 2021, or even increase the cuts, underpinned prices," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
He predicted WTI will stay boxed into a range of $39 to $44 a barrel until a full meeting of the Organization of the Petroleum Exporting Countries (OPEC) later this month.
OPEC+ held a ministerial committee meeting on Tuesday that made no formal recommendation. The group will hold a full ministerial meeting on November 30 and December 1 to discuss policy.
OPEC+ members are leaning towards delaying a previously agreed plan to boost output in January by 2 million barrels per day (bpd), or 2% of global demand, sources told Reuters early this week.
Supporting the case for a tighter supply policy next year, OPEC and its allies have revised oil demand scenarios for 2021 with demand seen weaker than previously anticipated, a confidential document seen by Reuters shows.
Both benchmarks were down earlier in the session after the American Petroleum Institute (API) said on Tuesday that US crude stockpiles rose by 4.2 million barrels last week, well above analysts' expectations in a Reuters poll for a build of 1.7 million barrels. .
"The API crude inventories rose much higher than expected, which added to pressure," said Jeffrey Halley, senior market analyst at OANDA.
Disappointing US retail sales also raised concerns over weaker US consumption in light of the Covid-19 resurgence, he said.
US retail sales increased less than expected in October, restrained by spiraling new Covid-19 infections and declining household income as millions of unemployed Americans lose government financial support.