Oil rebounded from a six-week low after a U.S. industry report signaled a supply overhang in the world’s biggest consumer may be easing.
Futures in New York rose as much as 1.1 percent after closing at the lowest since March 21 Tuesday. U.S. crude inventories fell by 4.16 million barrels last week and gasoline dropped by 1.93 million, the American Petroleum Institute was said to report Tuesday. OPEC deepened production cuts last month, with overall output dropping by 40,000 barrels a day, according to a Bloomberg News survey.
The API figures precede government data that will be released Wednesday, which is forecast to show a drop in crude inventories. Oil has fallen the past two weeks on concern that increasing U.S. output will offset efforts by the Organization of Petroleum Exporting Countries and its allies to eliminate a global glut. OPEC will meet again May 25 in Vienna to decide whether to extend the cuts through the second half of the year.
“The market was already expecting a draw-down in the U.S. inventory numbers and the API numbers back that up,” said Chris Weston, chief market strategist in Melbourne at IG Ltd. A potential drop in gasoline stockpiles “might help to offset some momentum which has built to the downside in the market.”
West Texas Intermediate for June delivery rose as much as 51 cents to $48.17 a barrel on the New York Mercantile Exchange and was at $48.03 as of 2:43 p.m. in Singapore. The contract lost $1.18, or 2.4 percent, to $47.66 on Tuesday. Total volume traded was about 9 percent below the 100-day average.
Brent for July settlement gained as much as 59 cents, or 1.2 percent, to $51.05 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $2.56 premium to WTI.
U.S. crude stockpiles probably fell by 3 million barrels in the week ended April 28, according to the median estimate in a Bloomberg survey of 11 analysts before an Energy Information Administration report on Wednesday. That would be a fourth week of declines.
Compliance among 10 OPEC members bound by the reduction deal strengthened to 102 percent from 89 percent in March, according to the Bloomberg News survey of analysts, oil companies and ship-tracking data. Iraq produced 4.41 million barrels a day, a drop of 20,000 barrels, bringing it closer to its target of 4.35 million, while Venezuela saw a 20,000 barrel-a-day drop in production to 1.98 million. Saudi Arabia’s production was steady at 9.95 million.
- Russia believes that extending last year’s oil-output deal with OPEC makes sense for at least 6 more months given the current market situation, said a Russian government official.
- Saudi Arabia will retain full ownership of its oil and gas reserves and sole decision-making authority on production levels after Saudi Arabian Oil Co.’s long-awaited initial public offering, according to Deputy Crown Prince Mohammed bin Salman.