Oil Rises to 1-Month High as OPEC Cuts Weighed Against U.S. GlutBy
U.S. output gains seventh week, stockpiles rise to record: EIA
U.K., Canada oil production halts helped bolster futures
Crude advanced to a one-month high as investors weighed record U.S. stockpiles against OPEC-led efforts to reduce the global oversupply.
Futures climbed 1.1 percent in New York. American crude output rose for a seventh week and supplies expanded, government data showed Wednesday. Refineries utilized the most capacity since January. Prices rallied above $50 a barrel a week ago after some OPEC countries supported a possible extension of their six-month deal trimming output. Disruptions at Canada’s second-biggest oil sands upgrader has curbed some supplies.
The increase in U.S. stockpiles is reviving concern they’ll counter output curbs led by the Organization of Petroleum Exporting Countries. OPEC Secretary-General Mohammad Barkindo said Sunday he’s “cautiously optimistic that the market is already rebalancing.” Production halts in the U.K. North Sea and Canada have since helped bolster prices over the past week.
"The strength of the market is predicated on expectations that we will see an agreement to extend the curbs," Gene McGillian, manager of market research for Tradition Energy in Stamford, Connecticut, said by telephone. "Record inventories took some of the wind out of the sails of the market."
West Texas Intermediate for May delivery rose 55 cents to settle at $51.70 a barrel on the New York Mercantile Exchange. It’s the highest close since March 7. Total volume traded was about 29 percent below the 100-day average.
Brent for June settlement rose 53 cents, or 1 percent, to $54.89 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a $2.76 premium to June WTI.
If OPEC continues to reduce supply past June, crude may advance to $55 a barrel, Pioneer Natural Resources Co. Chairman Scott Sheffield said in a Bloomberg TV interview.
U.S. crude production increased by 52,000 barrels to 9.2 million barrels a day last week, according to the Energy Information Administration. The gain left output at the highest level since January 2016.
Inventories rose 1.6 million barrels to 535.5 million barrels, the highest level in weekly EIA data compiled since 1982. Supplies 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. Refineries processed 16.4 million barrels a day in the week ended March 31, up 203,000 barrels from the prior week and the highest since January, the EIA data show.
"Crude is rising even though we have record inventories at Cushing," Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said by telephone. "That’s because the rise in refinery utilization is a reflection of where inventories are heading."
A fire at Syncrude Canada Ltd.’s plant is restricting supplies of both light synthetic crude and heavy Alberta oil. The unit, which can process 350,000 barrels a day of bitumen from oil sands formations, moved forward maintenance following the fire last month. The shutdown coincides with maintenance on other Canadian plants.
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- The planned initial public offering of Saudi Arabian Oil Co. is moving ahead without obstacles, Saudi Energy Minister Khalid Al-Falih told Al Riyadh newspaper.
- Crude prices are still too low to balance Arabian Gulf government budgets, Fitch Ratings said in a report.
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— With assistance by Angelina Rascouet, and Rakteem Katakey