Oil Trades Near Two-Week High After U.S. Stockpiles Plunge

Oil traded near the highest close in more than two weeks after crude stockpiles in the world’s largest economy slid more than forecast to a two-year low.

Futures fell 0.1 percent in New York after settling on Wednesday at the highest since Dec. 1. U.S. inventories fell 6.5 million barrels last week — more than double the average estimate in a Bloomberg survey — to the lowest level since 2015, government data showed. Prices slid slightly after a North Sea pipeline operator said that the critical Forties Pipeline System, halted on Dec. 11 by a hairline crack, would return to normal in early January.

Oil is heading for a second yearly advance after the Organization of Petroleum Exporting Countries and its allies including Russia decided to prolong production curbs through the end of 2018, with the goal of returning global stockpiles to their five-year average. Inventories won’t be “ anywhere close” to the level targeted by OPEC when it meets in June, Saudi Arabian Oil Minister Khalid Al-Falih said in an interview.

“The good news is that total commercial stocks and crude oil inventories both fell,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.

West Texas Intermediate for  February delivery was at $58 a barrel on the New York Mercantile Exchange, down 9 cents, at 12:37 p.m. in London. Total volume traded was about 58 percent below the 100-day average. The contract gained 0.9 percent on Wednesday.

Brent for February settlement fell 10 cents to $64.46 a barrel on the London-based ICE Futures Europe exchange after adding 1.2 percent Wednesday. The global benchmark traded at a premium of $6.48 to WTI.

U.S. crude inventories slipped to 436.5 million barrels last week, while oil exports jumped by 772,000 barrels a day, the biggest increase on record, the Energy Information Administration said on Wednesday. Meanwhile, gasoline stockpiles climbed 1.24 million barrels, the smallest gain in four weeks, and distillate supplies increased by 769,000 barrels.

Oil-market news:

Repairs on the Forties Pipeline System in the North Sea will be complete in the next three or four days and the conduit will return to normal in early January, operator Ineos said in a statement. Oil demand may jump in the new year as U.S. refiners plan to take fewer units offline than last winter, freeing them up to churn out more fuel. Saudi Aramco’s IPO is moving ahead and all options are open on where to list shares of the giant oil producer, the country’s finance minister said.