Oil rose to the highest level since early January in New York on expectations that government data will confirm another drop in U.S. crude inventories as the global surplus recedes.
Futures advanced for a fifth day, their longest gain in three months, while Brent crude rose to a new two-year high in London. Crude stockpiles dropped by 5.09 million barrels, while gasoline supplies fell by 7.7 million last week, the American Petroleum Institute was said to report. A Bloomberg survey also forecast a decline in oil inventories — the fifth in six weeks — before government data Wednesday.
Global benchmark Brent crude topped $60 a barrel last month for the first time since July 2015, while West Texas Intermediate, the U.S. marker, is set for the highest close in two years as Saudi Arabia and Russia signaled support for extending supply cuts well into 2018. The market was also buoyed by conflict between the Iraqi central government and Kurdish forces that threatened crude production from northern fields in the OPEC nation.
“U.S. stock draws have been leading and continue to lead the market higher,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland.
WTI crude for December delivery rose as much as 1.5 percent to $55.22 a barrel on the New York Mercantile Exchange, the highest since Jan. 3. It traded at $54.99 at 12:41 p.m. London time. Total volume traded was in line with the 100-day average. Prices climbed 5.2 percent last month.
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Brent for January settlement rose 61 cents, or 1 percent, to $61.55 a barrel on the London-based ICE Futures Europe exchange. The December contract expired Tuesday, up 47 cents, or 0.8 percent, at $61.37. The benchmark traded at a premium of $6.34 to January WTI.
An Energy Information Administration report Wednesday is forecast to show U.S. crude inventories fell by 1.3 million barrels last week, according to the median estimate in a Bloomberg survey of analysts. Gasoline stockpiles probably dropped by 1.55 million barrels. Daily exports of American crude climbed for the sixth time in seven weeks to 1.92 million barrels in the week ended Oct. 20, according to EIA data.
Saudi Arabia will need oil to trade at $70 a barrel next year to break even, the Washington-based International Monetary Fund said Tuesday in its Regional Economic Outlook for the Middle East and Central Asia. Goldman Sachs Group Inc. has hired a slate of traders from rivals to turn around its commodities business after it suffered the worst quarterly performance in the firm’s history as a public company.