September 20, 2017
Oil rose on signs the pace of U.S. stockpile gains is slowing as refiners resume operations after Hurricane Harvey, boosting crude demand.
Futures climbed as much as 1.3 percent in New York after declining 0.9 percent Tuesday. Inventories expanded by 1.44 million barrels last week, the American Petroleum Institute was said to report. That’s less than half the projected 3.9 million-barrel increase the government is forecast to report Wednesday. Some U.S. refiners are delaying maintenance to take advantage of strong margins.
While oil has rebounded the past two weeks, crude in the U.S. has struggled to hold above $50 a barrel as prices beyond that level make some shale profitable and boost supply. At the same time, the Organization of Petroleum Exporting Countries and its allies are said to be discussing extending by more than three months the output cuts that expire in March. Iraq, the group’s second-biggest producer, has said production should be reduced by an additional 1 percent to help rebalance the market.
“API yesterday sprung a bit of surprise when only showing a small build in crude stocks and a bigger-than-expected drop in fuel stocks,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “WTI is seeing resistance at $50 because of increased hedging activity from U.S. producers above that level, which is viewed as a comfortable break-even price for many producers.”
West Texas Intermediate for October delivery, which expires Wednesday, rose as much as 62 cents to $50.10 a barrel on the New York Mercantile Exchange, after sliding 43 cents on Tuesday. Total volume traded was about 36 percent below the 100-day average. The more-active November futures climbed 56 cents to $50.46 at 9:10 a.m. local time.
Brent for November settlement advanced 63 cents, or 1.1 percent, to $55.77 a barrel on the London-based ICE Futures Europe exchange. Prices lost 34 cents to $55.14 on Tuesday. The global benchmark crude traded at a premium of $5.31 to November WTI.
U.S. gasoline stockpiles fell by 5.06 million barrels last week and distillates dropped by 6.13 million, the API said Tuesday, according to people familiar with the data. That compares with a draw of 2.13 million barrels for gasoline and 1.95 million for distillates, according to the median forecast in a Bloomberg survey.
Some producers favor extending the OPEC-led supply cuts until the end of 2018, Iraqi Oil Minister Jabbar al-Luaibi said Tuesday, adding that there’s no firm decision yet on prolonging curbs. Russia is working with OPEC and other oil producers to stabilize crude prices, in line with the global accord to cut output, Russian Energy Minister Alexander Novak said in Algiers. Angola will cut crude exports to 1.54 million barrels a day in November from 1.74 million a day planned for October, according to a preliminary loading program obtained by Bloomberg.