Oil futures finished higher Thursday, as the U.S. and Turkey reached a cease-fire pact in Syria, temporarily easing Middle East tensions, and a tentative Brexit deal fueled appetite for assets perceived as risky.
Prices shook off earlier losses that had come on the back of a fifth straight weekly rise in U.S. crude supplies.
West Texas Intermediate crude for November delivery tacked on 57 cents, or 1.1%, to settle at $53.93 a barrel on the New York Mercantile Exchange, while December Brent added 49 cents, or 0.8%, at $59.91 a barrel on ICE Futures Europe.
Prices for both benchmarks moved decidedly higher around the last hour of regular trading. U.S. Vice President Mike Pence said Thursday the U.S. and Turkey struck a cease-fire in Syria that would last 120 hours, and allow Kurdish fighters to withdraw from a safe zone area.
The move for prices following the news “does seem counterintuitive,” Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch. “The Turkish incursion hadn’t taken oil production off the market, so the peace agreement isn’t directly impactful.”
Still, “there was some disappointment when the market failed to follow-through to the downside” following data showing large crude stock builds, in addition to U.S. crude production remaining at a record, he said.
Earlier news that U.K. and European Union leaders announced a tentative Brexit deal was supportive for oil prices, though the pact must be approved by the British parliament and other EU member states. U.K. Prime Minister Boris Johnson faces a tough task in winning approval.
Oil prices had traded mostly lower shortly after the Energy Information Administration on Thursday reported that U.S. crude supplies climbed for a fifth week in a row, by 9.3 million barrels for the week ended Oct. 11. Data were released a day late because of Monday’s U.S. Columbus Day holiday.
Crude supplies were forecast to increase by 4 million barrels, according to analysts polled by S&P Global Platts. The American Petroleum Institute on Wednesday reported a climb of 10.5 million barrels, according to sources.
“Inventories have built by a whopping 9.3 million barrels, led by the refinery utilization rate dropping to its lowest since hurricane Harvey in September 2017,” said Matt Smith, director of commodity research at ClipperData.
“A release of 1.3 million barrels from the [Strategic Petroleum Reserve] has only rubbed salt into the wounds of the bulls, adding to today’s crude build,” he said. “One saving grace for the bulls is that the drop to such a lowly level of refining activity has helped to encourage solid draws to both gasoline and distillate inventories.”
The EIA data showed supply declines of 2.6 million barrels for gasoline and 3.8 million barrels for distillates. The S&P Global Platts survey showed expectations for supply decreases of nearly 1.8 million barrels for gasoline and 2.6 million barrels for distillates.
On Nymex, November gasoline fell 0.1% to $1.6225 a gallon, while November heating oil rose 0.3% at $1.9481 a gallon.
“The buildup in U.S. stockpiles comes amid broader concerns of slowing global demand, as U.S.-China trade tensions continue to take a toll on the world-wide economy,” Han Tan, market analyst at FXTM, told MarketWatch. “With U.S. crude production holding at record highs, the onus appears to be on OPEC+ members to trigger deeper supply cuts, with any hopes of giving oil prices a sustained lift,” he said, referring to the Organization of the Petroleum Exporting Countries and its oil-producer allies.
Meanwhile, natural-gas futures settled with a gain after the EIA on Thursday reported that domestic supplies of natural gas rose by 104 billion cubic feet for the week ended Oct. 11. That was a bit lower than the average build of 108 billion cubic feet expected by analysts polled by S&P Global Platts.
November natural gas rose 1.5 cents, or 0.7%, to $2.318 per million British thermal units.