(Bloomberg) — Oil advanced the most in a week as a drop in U.S. crude stockpiles bolstered speculation that the country’s surplus is easing.
Futures climbed as much as 2.4 percent in New York to the highest in four days. Crude inventories shrank by 2.9 million barrels in the week ended June 12, the industry-funded American Petroleum Institute was said to have reported. Supplies fell for a seventh week, a Bloomberg survey showed before Energy Information Administration data Wednesday.
Crude is trading near its highest closing price in six months as declining U.S. stockpiles and a slowdown in drilling countered data showing that producers elsewhere are pumping more. U.S. production will peak at a 43-year high this year before trailing off in the second half, the EIA said last week. OPEC decided to maintain its output ceiling when it met this month in Vienna.
“Growth in U.S. oil production is slowing and in some places reversing, adjusting to lower oil prices,” Jens Pedersen, a Copenhagen-based commodities analyst at Danske Bank A/S, said by e-mail. “OPEC’s strategy of preserving market share at the expense of non-OPEC producers looks to be working.”
West Texas Intermediate for July delivery rose as much as $1.41 to $61.38 a barrel in electronic trading on the New York Mercantile Exchange, the biggest gain since June 10. Prices settled that day at $61.43, the highest level since Dec. 9. Total volume was about 10 percent above the 100-day average for the time of day. Prices have increased 15 percent this year.
Brent for August settlement gained $1.46 to $65.16 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $3.53 to WTI for the same month.
Crude inventories in the U.S., the world’s biggest oil consumer, probably dropped by 1.8 million barrels last week, according to a Bloomberg survey before the EIA data. Supplies were at 470.6 million through June 5, more than 90 million above the five-year average for this time of the year, data from the Energy Department’s statistical arm show.
“It seems the market is content to hold at these levels as long as the inventory numbers get chipped away,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “The market has rallied on the basis that we’re going to see a production cut, but it hasn’t be forthcoming yet.”
Stockpiles at Cushing, Oklahoma, the delivery point for WTI contracts and the largest U.S. oil-storage hub, expanded by 329,000 barrels last week, the API in Washington reported Tuesday, according to a person familiar with the figures.
The Organization of Petroleum Exporting Countries, whose 12 members supply about 40 percent of the world’s oil, maintained its output quota of 30 million barrels a day at a June 5 meeting as it sought to defend market share against higher-cost producers. The group has exceeded its target the past year, data compiled by Bloomberg showed.
Source: Energy Now Media