Oil is poised for a weekly gain as U.S. crude output continues to drop before a meeting between suppliers to discuss freezing production.
Futures climbed as much as 2.3 percent in New York, up 3.4 percent for the week. U.S. output slid for the 10th time in 11 weeks through April 1 as crude stockpiles fell, according to data from the Energy Information Administration on Wednesday. Major producers from Saudi Arabia to Russia will meet in Doha on April 17 to discuss a freeze in a bid to stabilize prices.
“U.S. production peaked at around 9.6 million barrels a day last year and is now down to about 9 million, so that’s more than 500,000 barrels out of the market,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “It’s certainly a good sign. A freeze will support prices, but oil is still open to downside risk because of the oversupply in the market.”
Crude slid to a 12-year low this year before rebounding amid signs a global glut will ease as U.S. production declines. Prices have whipsawed since Friday on speculation about whether an accord to cap output can be reached. Saudi Arabia said it will only agree to a freeze if it’s joined by other suppliers including Iran, while Kuwait said a deal can be done without Iran’s support.
West Texas Intermediate for May delivery advanced as much as 86 cents to $38.12 a barrel on the New York Mercantile Exchange and was at $38.04 as of 1:46 p.m. Hong Kong time. The contract dropped 49 cents to $37.26 on Thursday after climbing 5.7 percent the past two sessions. Total volume traded was about 18 percent above the 100-day average.
U.S. Output
Brent for June settlement rose as much as 72 cents, or 1.8 percent, to $40.15 a barrel on the London-based ICE Futures Europe exchange. Prices lost 41 cents to $39.43 on Thursday. The front-month contract’s discount to the second-month was at 5 cents. The global benchmark crude traded at a 85-cent premium to WTI for June.
U.S. crude production slid by 14,000 barrels a day to 9.01 million a day, according to EIA data. Refinery utilization rates rose ahead of the summer driving season by 1 percentage point for a second weekly gain to 91.4 percent of total capacity. Imports fell to the lowest level in two months.
Oil-market news:
Front-month Brent traded in backwardation on Thursday for the first time since January as scheduled maintenance at North Sea fields is seen curbing European supply. Wall Street’s biggest banks need to set aside more cash to cover losses as low oil prices take their toll, according to Moody’s Investors Service.
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