A record draw from America’s largest crude storage hub helped lift prices from the day’s lows, but not enough to ease fears that rising production in the U.S. and elsewhere will keep feeding a global supply glut.
In face of the mixed signals, futures in New York closed little changed on Thursday. Stockpiles at Cushing, Oklahoma, declined 4.18 million barrels last week, and the ninth straight decline in overall U.S. inventories marked the longest-ever stretch of winter draws. But the country’s production keeps rising, and OPEC boosted its forecast for rival oil-supply growth for a second month.
“It’s definitely a constructive report,” said Nick Holmes, an analyst at Tortoise Capital Advisors LLC in Leawood, Kansas, which manages $16 billion in energy-related assets. Yet, the fact that crude output ticked higher “continues to be a concern in the market.”
West Texas Intermediate for February delivery fell 2 cents to settle at $63.95 a barrel on the New York Mercantile Exchange after falling as low as $63.47. Total volume traded was less than 7 percent below the 100-day average.
Brent for March settlement slipped 7 cents to end the session at $69.31 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.42 to WTI for the same month.
U.S. crude inventories declined 6.86 million barrels last week to the lowest level since February 2015, the Energy Information Administration said. Cushing supplies slid to 42.4 million, levels last seen nearly three years ago. Meanwhile, output rose by 258,000 barrels a day to 9.75 million. Exports climbed by 234,000 barrels a day to 1.25 million.
U.S. Output Growth
Expected growth in total U.S. crude supply was revised higher by 110,000 barrels a day to 820,000 a day, led by conventional production, according to the Organization of Petroleum Exporting Countries report. The group and partners including Russia will meet this weekend in Oman to review their strategy for clearing the global oil glut.
“The continued draw-downs in crude inventories is indicative that the U.S. market is more balanced today than it has been in several years,” Matthew Beck, managing director of an $8 billion oil and natural gas portfolio at John Hancock Financial Services Inc. in Boston, said by telephone. Yet, with increasing oil prices, some investors are “skittish that activity levels are going to ramp up and supply growth is going to accelerate.”
OPEC compliance with oil-output cuts rose to a record 129 percent in December, according to Bloomberg calculations from the group’s secondary-source estimates in a monthly market report published Thursday. Analysts, traders are bearish on WTI crude futures, according to a Bloomberg survey. TransCanada Corp. has enough customer interest to go forward with the Keystone XL oil pipeline, if the company decides to build it. Saudi Arabian Oil Co. is ready for its initial public offering in the second half, with the government yet to decide where to list the shares, Chief Executive Officer Amin Nasser said.