Oil Set for Biggest Weekly Gain in 2 Months as U.S. Supply Dropsby
Crude inventories in U.S. dropped the most since June: EIA
End of oil-export ban seen helping WTI to premium over Brent
Oil in New York headed for the largest weekly gain in more than two months as U.S. inventories declined and the number of drilling rigs fell.
Futures are up 8.9 percent this week, the biggest advance since Oct. 9. Stockpiles slid 5.88 million barrels last week, the biggest loss since June, government data showed. A 1.2 million-barrel gain was projected in a Bloomberg survey. Gulf Coast refiners typically curb deliveries at the end of the year to reduce local taxes. The number of active oil rigs in the U.S. fell by 3 to 538 this week, according to Baker Hughes Inc.
The global oversupply that sent West Texas Intermediate toward its second yearly decline shows no signs of easing since the Organization of Petroleum Exporting Countries effectively abandoned output limits earlier this month. Brent, the benchmark for more than half the world’s oil, is poised to end 2015 with the lowest annual average price in 11 years, putting pressure on oil-exporting countries and companies.
“Concerns over global supply glut has been slightly eased by last week’s decline in stockpiles,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone. “Seasonally stockpiles should be easing, but the issue here is how fast. At this price level, the number of rigs should continue to fall.”
WTI for February delivery increased as much as 40 cents to $37.90 a barrel on the New York Mercantile Exchange and was trading at $37.83 at 9:32 a.m. in Seoul. Prices gained $1.36, or 3.8 percent, to $37.50 a barrel on Wednesday, the highest close for a front-month contract since Dec. 8. Prices have decreased 29 percent this year. The volume of all futures trading was about 79 percent below the 100-day average.
Brent for February settlement climbed $1.25, or 3.5 percent, to $37.36 a barrel on the London-based ICE Futures Europe exchange on Wednesday. The European benchmark crude closed at a 14-cent discount to WTI.
WTI oil traded this week at a premium to Brent for the first time since January on speculation that the end of a 40-year ban on U.S. crude exports may ease the nation’s oversupply.
Enterprise Products Partners LP will load 600,000 barrels of domestic crude onto a tanker in the Houston Ship Channel during the first week of January. Vitol Group was said to be sending the cargo to Europe. Shipments are beginning after President Barack Obama signed a spending bill last week that repealed broad limits against crude exports that had been in place since 1975.
Nationwide crude stockpiles fell to 484.8 million barrels in the week ended Dec. 18, according to the Energy Information Administration. Supplies are more than 120 million barrels above the five-year seasonal average.