Oil Tops $50 as Kuwait Says OPEC in Talks for Meeting ConsensusBy
Kuwait, other countries support prolonging curbs: Minister
OPEC exports seen declining further in March by cargo tracker
Crude rose to a three-week high after Kuwaiti comments bolstered optimism that OPEC and its partners will extend output curbs.
Futures in New York climbed 1.7 percent. Kuwait and other countries support prolonging production cuts that are scheduled to expire in June, the Persian Gulf emirate’s Oil Minister Issam Almarzooq told state-run news agency KUNA. Prices rose Wednesday after U.S. government data showed that gasoline inventories dropped more than expected, while refineries boosted the amount of crude they processed by the most in almost three years.
While U.S. crude supplies rose to a record last week, they increased by less than they were expected to, signaling that more oil is being pulled out of storage. That optimism and the disruption in Libyan output has helped drive prices for three days, their longest stretch of gains in more than a month. They slid last week to the lowest since November as American supply gains countered output cuts by other producers.
"It looks like they will potentially extend the cuts," Mark Watkins, the Park City, Utah-based regional investment manager for the Private Client Group at U.S. Bank, which oversees $136 billion in assets, said by telephone. "Even though there’s been skepticism about OPEC and its partners, the signs are pointing toward their success."
West Texas Intermediate for May delivery advanced 84 cents to settle at $50.35 a barrel on the New York Mercantile Exchange. It was the highest close since March 7.
Brent for May settlement, which expires Friday, rose 54 cents, or 1 percent, to $52.96 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a $2.61 premium to WTI.
U.S. gasoline inventories dropped by 3.75 million barrels last week, according to an Energy Information Administration report on Wednesday. They were projected to fall by 2 million barrels. Refineries processed 16.2 million barrels a day of crude last week, up 425,000 barrels from the prior week, according to the EIA. It was the biggest weekly increase since June 2014.
Nationwide crude stockpiles rose by 867,000 barrels to all-time high of 534 million. Analysts surveyed by Bloomberg projected 2-million-barrel gain. Oil output climbed further to above 9.1 million barrels a day.
"Traders are responding to speculation about the possible extension of the output cuts," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone. "This is more important than inventory levels at the moment. We’ll have to start seeing inventories decline before long or prices will come back under pressure."
- Exports in March from the Organization of Petroleum Exporting Countries dropped by 1.18 million barrels a day from the previous month to 24.4 million, as several countries not bound by the group’s supply deal curbed shipments, according to cargo-tracking company Kpler SAS.
- The OPEC-led supply cuts are gradually restoring the market to balance, the group’s Secretary-General Mohammad Barkindo said in a statement.
- Concern that OPEC output cuts have driven a surge in production from rival U.S. drillers may prevent an extension of the caps -- yet prices won’t suffer much, according to the chief economist at Russia’s state-owned Vnesheconombank.
— With assistance by Grant Smith