Futures gained as much as 1 percent in New York after dropping 5.9 percent the previous two sessions. Saudi Arabia was said to reduce February crude sales to China and southern Asian nations as it curbs supply in accordance with a deal between OPEC and other producers. The Energy Information Administration increased its forecast for U.S. production this year before a separate report Wednesday that is estimated to show crude inventories rose last week.
The EIA’s upward revision comes after the Organization of Petroleum Exporting Countries and 11 other nations agreed to curb output to trim a global supply glut, helping to push crude to an almost 18-month high in December. The price increase is luring non-OPEC producers back into the market. U.S. drillers added rigs for the 10th straight week, the longest run of gains since August 2011.
“Few envision that Brent crude at sub-$50 is a viable price in the first half of 2017 amid OPEC production cuts tightening up the market,” said Bjarne Schieldrop, chief commodities analyst at SEB AB bank in Oslo.
West Texas Intermediate for February delivery gained as much as 51 cents to $51.33 a barrel on the New York Mercantile Exchange and was at $51.27 at 10:15 a.m. in London. Total volume traded was about 18 percent below the 100-day average. The contract declined $1.14 to $50.82 on Tuesday.
Brent for March settlement rose as much as 62 cents, or 1.2 percent, to $54.26 a barrel on the London-based ICE Futures Europe exchange. The contract lost $1.30, or 2.4 percent, to $53.64 on Tuesday. The global benchmark was at a premium of $2.04 to March WTI.
Two Southeast Asian refiners received cuts of about 30 percent from Saudi Arabia, according to two people with knowledge of the matter who asked not to be identified because the information is confidential. Reductions to a buyer in India were about 20 percent, one of the people said.
- The EIA increased its U.S. output forecast for 2017 to 9 million barrels a day from 8.78 million projected in December, according to its monthly Short-Term Energy Outlook.
- U.S. crude inventories rose by 1.5 million barrels last week, a Bloomberg survey shows before a Wednesday report from the EIA. Industry data Tuesday was said to show supplies climbed by 1.53 million last week.
- Iraq has reduced its output by 160,000 barrels a day and will comply with curbs it agreed to make under an OPEC output deal, Oil Minister Jabbar Al-Luaibi said.