August 10, 2017
Oil climbed above $50 a barrel in New York after OPEC boosted estimates of demand for its crude amid stronger-than-expected fuel consumption and a weaker outlook for rival supply.
Futures advanced 1 percent after climbing 0.8 percent Wednesday as the Organization of Petroleum Exporting Countries raised forecasts for the amount it needs to supply for 2017 and 2018. In the U.S., output slid for the second time in three weeks, according to Energy Information Administration data, while stockpiles dropped by 6.45 million barrels, almost triple the median forecast in a Bloomberg survey. Gasoline inventories unexpectedly rose for the first time since early June.
Oil has fluctuated below $50 a barrel for more than a week as investors weigh rising global supply against output cuts by OPEC members and its allies including Russia. While U.S. crude stockpiles have declined during a period of strong seasonal demand, they remain almost 90 million barrels above the five-year average.
“This leg higher was driven by a strong draw in U.S. crude stocks,” said Jan Edelmann, an analyst at HSH Nordbank AG in Hamburg. “The rebalancing of the oil market is happening with demand catching up with supply.”
West Texas Intermediate for September delivery was at $50.07 a barrel on the New York Mercantile Exchange, up 51 cents, at 8:37 a.m. local time. Total volume traded was about 86 percent above the 100-day average. Prices rose 39 cents to $49.56 on Wednesday, the first gain in three sessions.
Brent for October settlement rose 77 cents to $53.47 a barrel on the London-based ICE Futures Europe exchange, after adding 56 cents on Wednesday. The global benchmark crude traded at a $3.27 premium to October WTI, the widest since November 2015, according to data compiled by Bloomberg. The front-month spread has widened about 51 percent since the beginning of this year.
U.S. crude production dropped by 7,000 barrels a day to 9.42 million a day last week, the EIA reported Wednesday. Gasoline inventories expanded by 3.42 million barrels, the biggest weekly advance since January.
Libyan output climbed by 154,300 barrels a day to about 1 million a day in July, OPEC said in its monthly report Thursday. Production from all 14 members reached 32.87 million a day. OPEC and its allies invited nations including Iraq and the United Arab Emirates to a Joint Technical Committee meeting in Vienna on Aug. 21, according to two people familiar with the matter. Saudi Arabia’s Crown Prince Mohammed bin Salman discussed economic and energy investment opportunities with Iraqi Oil Minister Jabbar al-Luaibi in Jeddah, the state-run Saudi Press Agency reported.