Oil headed for its biggest weekly gain in a month as sliding U.S. inventories and signs of stronger demand raise speculation a supply glut in the world’s biggest consumer may ease.
Futures in New York have gained 7 percent this week, the most since June 30. U.S. crude stockpiles fell to the lowest since January, while gasoline inventories are at the least this year, the Energy Information Administration said Wednesday. The American Petroleum Institute said Thursday the nation’s fuel use in June surged to the highest for that month in a decade.
U.S. oil prices are inching closer to $50 a barrel, a level not reached since May on concerns that efforts by the Organization of Petroleum Exporting Countries and its allies to lower output will be offset by rising production elsewhere, particularly the U.S. Kuwait this week agreed to trim 2017 supplies, joining the United Arab Emirates in promising to pump less after Saudi Arabia called on OPEC producers to deepen cuts.
“Improving demand for fuel has helped the rundown in inventory, which in turn has been a big reason for the increase in prices this week,’’ said Ric Spooner, an analyst at CMC Markets in Sydney. “The difficulty is that we are heading back towards that $50 to $55 zone, which the oil market has been unable to get through. That is the level which carries a potential for increased shale oil production” from the U.S., he said.
West Texas Intermediate for September delivery was at $48.92 a barrel on the New York Mercantile Exchange, down 12 cents, as of 2:53 p.m. in Singapore. Total volume traded was about 34 percent below the 100-day average. Prices on Thursday gained 29 cents, or 0.6 percent, to close at $49.04, the highest since May 30.
Brent for September settlement declined 9 cents to $51.40 a barrel on the London-based ICE Futures Europe exchange, heading for a 7 percent weekly advance. The contract climbed 52 cents, or 1 percent, on Thursday to close at $51.49. The global benchmark crude traded at a premium of $2.45 to WTI.
Falling Inventories
Total deliveries of petroleum products, a measure of demand, climbed to 20.3 million barrels a day, according to API. Demand for distillate fuel and jet fuel rose, while gasoline consumption fell. U.S. gasoline inventories fell to 230 million barrels last week, the lowest level since Dec. 23, EIA data showed.
Oil-market news:
OPEC shipments will increase to 24.14 million barrels a day in the four weeks to Aug. 12 versus the period to July 15, tanker-tracker Oil Movements said in a weekly report. Saudi Aramco’s advisers have recommended London for the company’s listing, with U.S. disclosure rules a concern for Saudi authorities, Reuters reports, citing unidentified sources familiar with the matter. Drillers from ConocoPhillips to Hess Corp. to Statoil ASA have slashed their capital spending plans in recent days, as companies lay out their plans to cope with oil prices stuck below $50 a barrel.
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