Oil Surges Above $49 as Supply Draw Shows Market in Better ShapeBy
U.S. crude inventories fell to lowest level since January
Kuwait joined Saudis, U.A.E. in pledging to cut supplies
Oil closed above $49 a barrel for the first time since May on growing optimism OPEC’s supply cuts are trimming a supply glut.
Futures climbed 0.6 percent in New York for a fourth day of gains. Kuwait joined the U.A.E. in promising to pump less oil after Saudi Arabia called on OPEC producers to cut more supply. U.S. crude inventories declined by 7.21 million barrels last week to the lowest level since early January, according to the Energy Information Administration.
The market is digesting “very strong draws in inventories across the board,” Adam Wise, who runs a $8 billion oil and natural gas bond and private equity portfolio at John Hancock Financial Services Inc. in Boston, said by telephone. “We’ve also seen comments out of Saudi Arabia supporting prices in the form of export reduction. Sentiment is finally being forced to pay attention to the fundamentals.”
Oil inched closer to $50 a barrel after lingering below the key level since late May in New York amid concerns that cuts by the Organization of Petroleum Exporting Countries and its allies including Russia will be offset by rising production from other countries. Saudi Arabia promised deep cuts to crude exports in August and the latest earnings results show some of the world’s biggest oil companies are leaving the worst downturn in a generation behind.
West Texas Intermediate crude for September delivery rose 29 cents to settle at $49.04 a barrel on the New York Mercantile Exchange. Total volume traded was about 27 percent above the 100-day average. The U.S. benchmark rose closer toward its 200-day moving average of about $49.42 a barrel.
Brent for September settlement climbed 52 cents to end the session at $51.49 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $2.45 to WTI.
U.S. crude supplies fell to 483.4 million barrels and gasoline stockpiles slid to the lowest level since December last week. Supplies at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, also slipped for a 10th week, EIA data showed. While nationwide crude production declined for the first time in four weeks, output from the lower-48 states jumped for a fourth week to the highest level since July 2015.
“It’s been a bullish week certainly, data-wise,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. “This market really has a lot going for it at the moment. There is an impression that we’re coming into balance finally and it’s driven by this pretty steep decline in U.S. crude oil inventories.”
- OPEC shipments will increase to 24.14 million barrels a day in the four weeks to August 12 versus the period to July 15, tanker-tracker Oil Movements said in a weekly report.
- Oil products have led draws in global inventories this month, Energy Aspects Ltd. said in a report
- Saudi Aramco’s advisers have recommended London for the company’s listing, with U.S. disclosure rules a concern for Saudi authorities, Reuters reports, citing unidentified sources familiar with the matter.
— With assistance by Sharon Cho, Stephen Stapczynski, and Grant Smith