Oil Closes at 1-Month High as Refinery Boost Offsets Supply GainBy
U.S. crude supply rises to record 535.5 million barrels: EIA
Refineries operated at highest rate since December last week
Crude closed at the highest level in almost one month as concern over record U.S. stockpiles was offset by speculation that rising refinery demand will curb supply in coming weeks.
Supplies rose to 535.5 million, the most in weekly data going back to 1982, the U.S. Energy Information Administration said Wednesday. Refineries operated at 90.8 percent of capacity, up 1.5 percentage points from the prior week and the highest since January. Refiners typically increase crude processing at this time of year as they prepare for the summer surge of gasoline demand.
Oil in the U.S. rose above $50 a barrel last week after some members of the Organization of Petroleum Exporting Countries voiced support for an extension to a six-month deal to cut production past June. OPEC Secretary-General Mohammad Barkindo said on Sunday in Baghdad that he’s “cautiously optimistic that the market is already rebalancing.”
"People are probably looking beyond these numbers and thinking that we’ll see three to four weeks of draws because of the pickup in refinery utilization," Joe Bozoyan, an equity portfolio manager who helps oversee $5 billion in energy and utility shares at John Hancock in Boston, said by telephone. "Otherwise prices would be lower."
West Texas Intermediate for May delivery rose 12 cents to $51.15 a barrel on the New York Mercantile Exchange. It was the highest close since March 7. Total volume traded was about 14 percent above the 100-day average.
Brent for June settlement advanced 19 cents to $54.36 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a $2.76 premium to June WTI.
Refineries processed 16.4 million barrels a day of crude in the week ended March 31, up 203,000 barrels from the prior week and the highest since January, according to the EIA.
Crude stockpiles rose by 1.57 million barrels last week. A 150,000-barrel decline was forecast by analysts surveyed by Bloomberg. Inventories at Cushing, Oklahoma, the delivery point for WTI futures and the nation’s biggest oil-storage hub, increased 1.41 million barrels to a record 69.1 million.
American crude production rose by 52,000 barrels a day to 9.2 million barrels a day, the most since January 2016. U.S. oil drillers boosted the rig count to 662 last week, the most since September 2015, Baker Hughes data show.
- Saudi Arabia lowered oil pricing for European customers, a sign the world’s biggest crude exporter is seeking to expand market share in the region dominated by Russia.
- A fire at Syncrude Canada Ltd.’s oil sands upgrader is restricting supplies of heavy Alberta crude from reaching refineries, pushing prices higher.
- Think $60,000 an acre for drilling rights in the Permian Basin is pricey? Consider multiplying that by three or four times.