Futures gained as much as 0.8 percent in New York. U.S. inventories fell by 1.5 million barrels last week, the American Petroleum Institute was said to report. While OPEC and its allies are mainly discussing prolonging the cuts until March 2018, other options also include the curbs lasting for the whole of 2018, Algeria’s Energy Minister Noureddine Boutarfa said in Vienna, where the producer group will meet on Thursday.
Oil has climbed to the highest price in more than a month as Saudi Arabia and non-OPEC member Russia rally support for a nine-month extension to the output-cut deal by the Organization of Petroleum Exporting Countries and its allies. While they have succeeded in denting stockpiles in the U.S., inventories still remain above the five-year average while American drillers continue to add rigs and boost production.
“Oil continues higher because of the industry stockpile data and also the fear of being caught too short into the OPEC announcement tomorrow,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S in Copenhagen. “However, as long as we do not know the trajectory of shale oil production and the risk of demand growth slowing there could be some downside risk post the meeting.”
West Texas Intermediate for July delivery was at $51.81 a barrel on the New York Mercantile Exchange, up 34 cents, at 9:12 a.m. in London. Total volume traded was about 55 percent above the 100-day average. Prices ended the session at $51.47 on Tuesday, the highest level since April 18.
Brent for July settlement was 37 cents higher at $54.52 a barrel on the London-based ICE Futures Europe exchange. Prices rose 28 cents to $54.15 on Tuesday. The global benchmark crude traded at a premium of $2.71 to WTI.
U.S. crude stockpiles probably dropped by 2 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. That would be the seventh weekly decline after supplies rose to the highest level in more than three decades at the end of March.
- “Not everybody” is on board yet for a nine month extension to output cuts, Kuwait’s oil minister Issam Almarzooq told reporters Tuesday, before leaving his country for Vienna.
- Moody’s Investors Service cut its rating on China’s debt for the first time since 1989, challenging the view that the nation’s leadership will be able to rein in leverage while maintaining the pace of economic growth.
- Iraq is mulling an oil hedging program to lock in prices for future crude sales, potentially topping a similar deal run by Mexico that is considered the largest energy trade in Wall Street.