Oil Extends Bull Market as U.S. Supply Drops Amid Rising Demand

(Bloomberg) 

Oil rose in a bull market after data showed a surprise decline in U.S. crude stockpiles, taking OPEC and its allies closer to a goal of reducing a global glut.

Futures added as much as 1.4 percent in New York after rising 0.5 percent Wednesday. Crude inventories fell by 1.85 million barrels last week after analysts surveyed by Bloomberg forecast an increase. U.S. exports jumped 61 percent to 1.49 million barrels a day, the Energy Information Administration reported. In Libya, production neared the 1 million-barrel-a-day mark as disruptions eased.

Oil has entered a bull market on forecasts for rising demand, the return of U.S. Gulf Coast refiners after Hurricane Harvey, and as Turkey threatened to halt Kurdish crude exports through its territory. The Organization of Petroleum Exporting Countries and Russia are urging producers to stay the course as planned supply-curbs start to drain a surplus. At the same time, while U.S. production is at the highest since July 2015, it had the smallest gain this month.

“The combination of muted supply growth and strong demand is helping prices higher,” said  Giovanni Staunovo, an analyst at UBS Group AG. “The overhang is being removed. Overall, the bullish sentiments remain.”

West Texas Intermediate for November delivery was at $52.61 a barrel on the New York Mercantile Exchange, up 47 cents, at 1:43 p.m. London time. Total volume traded was about 23 percent above the 100-day average. Prices increased 26 cents to $52.14 on Wednesday.

Brent for November settlement gained 53 cents to $58.43 a barrel on the London-based ICE Futures Europe exchange, after losing 54 cents on Wednesday. The global benchmark crude traded at a premium of $5.81 to WTI.

Oil-market news:

Iraq said Turkey agreed to deal exclusively with its central government over exports of Kurdish crude oil, a step that could disrupt shipments from the independence-seeking Kurd region. U.S. oil production increased by 37,000 barrels last week to 9.55 million barrels a day, the EIA said Wednesday. Libya is producing about 950,000 barrels a day after disruptions ended at its biggest field, Sharara, according to a person familiar with the matter. The nation was pumping 1.05 million barrels a day in August. The balancing of the oil market is in its final stages, Energy Aspects said in a report. The only real crude surplus is in the U.S., which will become supplier of last resort “as we whittle down the last of the stored barrels,” it said.