Oil prices steadied on Wednesday as a weaker dollar and lower U.S. crude stockpiles provided a modest bounce off six-year lows hit the previous session, when worries about China’s plummeting currency and economic slowdown sank prices.
Concerns that U.S. inventories could build again from higher crude imports and refinery outages kept a lid on the rebound. Prices rose less than 1 percent after Tuesday’s 4 percent slump.
“The market needed a big drawdown to reverse the current trends and didn’t get it,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
Crude stockpiles in the United States fell by 1.7 million barrels last week, just short of market expectations for a draw of 1.8 million barrels, data from the Energy Information Administration (EIA) showed.
Gasoline inventories also fell, by 1.3 million barrels versus the 647,000 barrels forecast.
But U.S. crude imports rose by 393,000 barrels per day to 7.0 million bpd. Distillates, which included diesel and heating oil, also jumped by 3.0 million barrels, more than the 1.3million-barrels expected.
U.S. crude futures CLc1 were up 2 cents at $43.10 a barrel by 12:17 p.m. EDT, after gaining almost 80 cents at the session high. On Tuesday, the market had fallen $1.88, or more than 4 percent, to settle at $43.08 a barrel, its lowest close since March 2009.
Futures of Brent LCOc1, the global benchmark, were up 20 cents at $49.38 a barrel, after a session high at $49.91.
The dollar fell more than 1 percent against a basket of other currencies .DXY, pulled down by doubts over whether the U.S. Federal Reserve will raise interest rates after China’s currency devaluation drove the yuan to a four-year low.
China is the world’s biggest oil consumer after the United States and a weaker yuan erodes its purchasing power for dollar-denominated imports.
The International Energy Agency said low fuel prices were stimulating global demand for oil but recovery was slow.
“While a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016,” the Paris-based energy watchdog said.