April 11, 2017
Oil traded near $53 a barrel after its longest winning streak this year as estimates showed a decline in record-high U.S. crude stockpiles.
Futures were little changed in New York after rising 5.7 percent in the previous five sessions. Inventories probably dropped by 1.75 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Saudi Arabia reduced production to 9.9 million barrels a day last month, below levels it committed to under OPEC’s accord to rebalance world markets, according to a person with knowledge of the data.
Oil has rallied above $50 a barrel after some members of the Organization of Petroleum Exporting Countries voiced support for an extension of production cuts past June, offsetting rising U.S. output. The curbs have stabilized the market, according to Russia, which is among 11 other nations outside the group that have joined in the pact aimed at easing a global glut. Prices this week have also been buoyed by a production outage at Libya’s largest oil field.
“People have been picking up on the bullish indicators in the market ahead of the seasonal draw in crude stocks,” said David Wech, an analyst at JBC Energy GmbH in Vienna.
West Texas Intermediate for May delivery was at $53.06 a barrel on the New York Mercantile Exchange, down 2 cents, at 1:29 p.m. London time. Total volume traded was about 22 percent below the 100-day average. The contract gained 84 cents to $53.08 on Monday, the highest close since March 7.
Brent for June settlement was down 3 cents at $55.95 a barrel on the London-based ICE Futures Europe exchange, after rising 74 cents to $55.98 on Monday. The global benchmark crude was at a premium of $2.50 to June WTI.
U.S. crude inventories climbed to 535.5 million barrels at the end of March, the highest in weekly data compiled by the EIA since 1982. While total supplies may have started to fall last week, stockpiles at Cushing in Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, probably rose by 800,000 barrels, according to a forecast compiled by Bloomberg.
“The market has received a healthy boost from OPEC and Russia talking about extending the output-cut deal and news of a supply halt out of Libya,” said Jens Naervig Pedersen, a senior analyst at Danske Bank A/S in Copenhagen. “Fundamentals will likely not be able to support prices much further in the short term.”
Russia’s output cut will reach 250,000 barrels a day by the middle of this month as it works toward a target of 300,000 a day, Interfax reported, citing Energy Minister Alexander Novak. Libya’s National Oil Corp. declared force majeure on loadings of crude from the Zawiya oil terminal, citing a halt in production at the Sharara field, according to a copy of the NOC’s decree obtained by Bloomberg. Saudi Arabia cut output by 111,000 barrels a day last month, according to a person with knowledge of the matter who asked not to be identified because the information isn’t public. Production had increased in February to 10.011 million barrels a day. Global stockpiles will continue to decline over the coming months as refiners process more crude after returning from maintenance, Kuwait’s Oil Minister Issam Almarzooq said, according to a report from the Kuwait News Agency.