Oil rallied after U.S. crude stockpiles rose less than anticipated, countering the dour outlook reflected by Saudi Arabia’s decision to cut its prices.

West Texas Intermediate rose 1.1 per cent to settle above US$73 a barrel, after swinging in a US$2 range. U.S. crude and refined product exports rose 1.33 million barrels last week, keeping inventories in check, according to data from the Energy Information Administration. Traders viewed the data as a sign that global demand persists for U.S. products, despite worries that China’s struggles with COVID will delay its economic recovery.

“The higher exports were the reason for the more bullish reaction,” said Rob Thummel, a portfolio manager at Tortoise Capital Advisors, which manages roughly US$8 billion in energy-related assets.

Earlier, crude pared gains after state-controlled Saudi Aramco cut crude prices to Asia and Europe, a signal that the market interpreted as demand remaining sluggish.

Crude was off to a gloomy start to the year with futures curves continuing to signal a market that is oversupplied. At the same time, the oil market is grappling with lower levels of participation, which can lead to swings that seem larger than the fundamental data supports. Open interest remains near multiyear lows, leaving prices susceptible to large intraday swings.

Prices:

• WTI for February delivery rose 83 cents to settle at US$73.67 a barrel in New York.
• Brent for March settlement rose 85 cents to settle at US$78.69 a barrel.