Oil prices rose on Wednesday as investors covered short positions when a big rise in U.S crude inventories was not as massive as many had feared, and as gasoline futures got a boost from a surprise decline in inventories of the fuel.
U.S. crude stocks rose 13.8 million barrels in the last week as refineries cut output, while gasoline stocks decreased, the Energy Information Administration said. The rise did not shock the market, since preliminary data from the American Petroleum Institute (API) late on Tuesday showed an even bigger increase.
"A lot of the downside was already priced in," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
"In the near-term, this is going to become a technical game of price levels and where speculators are going to capitulate. If we start to get through the lows of January, that could force some speculators to retrench their position."
Hedge funds and other speculators raised their net long U.S. crude futures and options positions in the week to Jan. 31 to the highest level on record, data from the U.S. Commodity Futures Trading Commission showed last week.