Oil extended gains to the highest level in almost a month, with investor focus shifting back to U.S. crude inventories after supply disruptions and optimism over OPEC’s output curbs drove a rally over the past week.
Futures added as much as 0.9 percent in New York after rising 1.6 percent on Tuesday. U.S. crude stockpiles declined by 1.83 million barrels last week, the industry-funded American Petroleum Institute was said to report, while government data Wednesday is forecast to show they dropped from a record. Production from the North Sea Buzzard field was halted after an unplanned outage, according to a person familiar with the matter.
Oil has regained footing above $50 a barrel after some members of the Organization of Petroleum Exporting Countries voiced support for an extension to a six-month deal to cut production past June. Crude was also helped by a disruption in Libya’s biggest field, which has since resumed pumping. OPEC Secretary-General Mohammad Barkindo said Sunday that he is “cautiously optimistic that the market is already rebalancing,” even amid concern that ample U.S. supplies are undermining curbs by other producers.
“The likelihood that the OPEC-led production agreement will be extended for another six months is providing some support to oil,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “The extent of the recent rally makes the market vulnerable to bad news, especially poor inventory data.”
West Texas Intermediate for May delivery rose as much as 46 cents to $51.49 a barrel on the New York Mercantile Exchange and was at $51.45 at 8:05 a.m. in London. Total volume traded was about 25 percent below the 100-day average. The contract closed at $51.03 on Tuesday, the highest settlement since March 7. Prices slid below $50 early last month for the first time since December.
U.S. Supplies
Brent for June settlement rose as much as 49 cents, or 0.9 percent, to $54.66 a barrel on the London-based ICE Futures Europe exchange. Prices advanced $1.05, or 2 percent, to $54.17 on Tuesday. The global benchmark traded at a premium of $2.69 to WTI.
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U.S. crude inventories probably dropped by 150,000 barrels to 533.8 million barrels in the week ended March 31, according to a Bloomberg survey before an Energy Information Administration report. Nationwide stockpiles have gained by about 55 million barrels since the start of this year.
Oil-market news:
Permian drillers’ newfound ability to run multiple rigs in very close proximity has boosted the land’s value this year to between $175,000 and $220,000 an acre, according to Mike Kelly of Seaport Global Securities LLC and Bill Marko of Jefferies Group LLC. China became the biggest buyer of U.S. crude oil in February, surpassing Canada, at a time when OPEC is cutting back output.
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