Natural gas flares are seen at an oil pump site outside Williston, North Dakota on March 11 2013. Picture: REUTERS
Natural gas flares are seen at an oil pump site outside Williston, North Dakota on March 11 2013. Picture: REUTERS

Tokyo — Oil prices edged higher on Thursday with the market mood switching to relief as Opec forecast a supply deficit in 2020, from doom and gloom over data showing a surprise increase in US crude inventories.

Brent futures rose 24 cents, or 0.4%, to $63.96 a barrel by 2.42am GMT, after skidding 1% on Wednesday on the US stocks build-up.

West Texas Intermediate crude was down 10 cents, or 0.2%, at $58.85 a barrel, following a 0.8% drop the previous session.

Opec said on Wednesday it now expects a small deficit in the oil market in the next year, suggesting the market is tighter than previously thought — even before the latest pact with other producers to curb supply takes effect.

The revised forecast marks a further retreat from a prediction of a glut in 2020 as US production growth begins to slow.

Still, US inventories are on the rise. Crude stockpiles last week rose unexpectedly, gaining more than 800,000 barrels, compared with a Reuters poll that forecast a 2.8-million barrel decline.

Inventories of petroleum products also increased, with gasoline stocks surging by more than 5-million barrels and distillates gaining a bit over 4-million barrels — with both more than double expectations.

“The overall report was very bearish as demand fell off a cliff and total stockpiles climbed to the highest level in seven months,” said Edward Moya, senior market analyst at Oanda.

Beyond the balance between inventories and supply, investors are also awaiting news on negotiations between Washington and Beijing to end a long-running trade war and get an agreement before another round of US sanctions kicks in.

The lingering battle between the world’s two biggest economies has hit global growth, in the process denting demand for crude and oil products.

US President Donald Trump is expected to discuss tariffs on Chinese goods set to be imposed on December 15 with top trade advisers as markets brace for fallout from China.

“In the near-term, US-China trade remains the primary catalyst and the 500-pound gorilla in the room,” said Stephen Innes, chief Asia market strategist at AxiTrader.