Oil pared gains after an industry report was said to show a surprise increase in U.S. crude inventories.
Prices pulled back in after-market trading following the release of data from the American Petroleum Institute Wednesday, which was said to show crude stockpiles increased by 3.1 million barrels last week. A Bloomberg survey estimated that U.S crude stockpiles slid by 2.4 million barrels last week.
Crude supplies in Cushing, Oklahoma, the biggest U.S. oil-storage hub, climbed by 1.22 million barrels, the API data showed. That would be a seventh straight increase, if Energy Information Administration data released on Thursday confirms it.
“It was a little bit of a surprise. The last two weeks of exports– I don’t think will be maintained. I think this is a reflection of that to a certain extent,” Kyle Cooper, director of research at IAF Advisors in Houston, said by telephone. The recent builds at Cushing and the potential for another “is certainly a bearish factor for WTI.”
On Wednesday, OPEC said in its monthly report that 2018 demand will be about 200,000 barrels higher than previously predicted, and that output caps adopted by most producers are trimming a global glut. Yet at the same time, the EIA raised its forecast for U.S. crude production in 2018.
Oil has advanced more than 4 percent this week on speculation the Organization of Petroleum Exporting Countries, Russia and other parties to the historic 2016 production accord may extend the deal beyond its March expiration. Saudi Arabia warned it will cut the amount of crude available for sale next month, while OPEC Secretary-General Mohammad Barkindo signaled the group is looking to expand the number of nations participating in the deal.
“Oil is having a hard time finding its course,” said Rob Thummel, managing director at Tortoise Capital Advisors LLC, which handles $16 billion in energy-related assets. “There are a lot of potential near-term positive catalysts out there for the oil market, but none of them have 100 percent certainty.”
West Texas Intermediate for November delivery traded at $51.03 a barrel at 4:39 p.m. after settling at $51.30 a barrel on the New York Mercantile Exchange, the highest level in more than a week. Total volume traded was about 15 percent below the 100-day average.
Brent for December settlement rose 33 cents to end the session at $56.94 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.34 to December WTI.
The gasoline crack spread, a rough measure of the profit from refining crude into gasoline, jumped 2.3 percent to settle at $16.29 a barrel. Delta Air Lines Inc.’s refinery in Pennsylvania was said to be shutting some units down after a fire on Wednesday, according to a person familiar with operations. The fire occurred on a platformer and the refinery is operating, the company said.
OPEC will need to supply 33.1 million barrels a day next year, about 350,000 more than it pumped last month, the group said in a report on Wednesday. Meanwhile, the EIA’s monthly Short-Term Energy Outlook showed U.S. output rising to average 9.92 million barrels a day in 2018. The agency revised global demand lower for next year.
The API report showed distillate supplies rose by 2.03 million barrels last week, according to people familiar with the data, who asked not to be named because the information isn’t public. Gasoline stockpiles slid by 1.58 million barrels, the data showed.
A Bloomberg survey also showed that distillate inventories probably fell by 1.93 million. At Cushing, inventories likely increased by 1.8 million barrels, according to a separate forecast compiled by Bloomberg.
Pierre Andurand’s hedge fund trailed the oil-price rally last month, posting a 2.4 percent gain compared with the almost 10 percent boost for Brent crude, according to people familiar with the performance. Compliance with crude-output cuts by the OPEC members participating in curbs increased to 97 percent in September versus a revised 95 percent in August, according to Bloomberg calculations from the producer group’s secondary source estimates.