Signs of growing U.S. fuel demand are propping up oil above $49 a barrel, with more refinery purchases seen helping ease a glut in American stockpiles.
Futures in New York were holding gains after rising 2.4 percent Wednesday, when U.S. government data showed that gasoline inventories dropped more than expected. Additionally, refineries boosted the amount of crude they processed by the most in almost three years. That helped overshadow a gain in American output and stockpiles that have undermined production curbs this year by OPEC and its partners.
While U.S. crude inventories rose last week, they increased by less than they were expected to, signaling that more oil is being pulled out of storage. That optimism and an unexpected disruption in Libyan production has helped drive prices up 3.7 percent over the past two sessions, their longest stretch of gains in more than a month. They had slid last week to the lowest since November as increasing American supplies countered output cuts by other producers.
“The weekly U.S. oil statistics were bullish,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. With OPEC sticking to its output accord and oil-product inventories falling, a “bullish cocktail is in the making.”
West Texas Intermediate for May delivery was at $49.65 a barrel on the New York Mercantile Exchange, up 14 cents, at 9:30 a.m. in London. Total volume traded was about 3.8 percent above the 100-day average. The contract gained $1.14 to $49.51 on Wednesday.
Processed Crude
Brent for May settlement, which expires Friday, was 4 cents higher at $52.46 a barrel on the London-based ICE Futures Europe exchange. Prices advanced $1.09, or 2.1 percent, to $52.42 on Wednesday. The global benchmark crude was at a premium of $2.82 to WTI.
U.S. gasoline inventories dropped by 3.75 million barrels last week, according to an Energy Information Administration report on Wednesday. They were projected to fall by 2 million barrels. Refineries processed 16.2 million barrels a day of crude last week, up 425,000 barrels from the prior week, according to the EIA. It was the biggest weekly increase since June 2014.
Record nationwide crude stockpiles rose by 867,000 barrels, compared with a projected 2-million-barrel gain. Oil output climbed further above 9.1 million barrels a day.
Oil-market news:
Exports in March from the Organization of Petroleum Exporting Countries dropped by 1.18 million barrels a day from the previous month to 24.4 million, as several countries not bound by the group’s supply deal curbed shipments, according to cargo-tracking company Kpler SAS. The OPEC-led supply cuts are gradually restoring the market to balance, the group’s Secretary-General Mohammad Barkindo said in a statement. Concern that OPEC output cuts have driven a surge in production from rival U.S. drillers may prevent an extension of the caps — yet prices won’t suffer much, according to the chief economist at Russia’s state-owned Vnesheconombank.
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