Oil popped in after-hours trading as an industry report showed the biggest draw in U.S. crude stockpiles for this time of year since 1999.
Futures climbed from the highest level in more than three years after the American Petroleum Institute was said to have reported domestic oil inventories tumbled by 11.2 million barrels last week. That’s nearly triple the estimate in a Bloomberg survey and would be the largest draw for this time of year since 1999 if Energy Information Administration data on Wednesday confirms it.
The rise came after an already bullish day for West Texas Intermediate, the U.S. benchmark oil price. Prior to the report, prices surged as cuts by the Organization of Petroleum Exporting Countries and a tighter U.S. inventory picture stoked optimism of more balanced markets. The enthusiasm didn’t waver even as a U.S. government report predicted that output would surpass 10 million barrels a day this year.
“Inventory trends have been very bullish,” Kyle Cooper, director of research at IAF Advisors in Houston, said by telephone. “Despite the EIA’s forecast for record oil production this year and next year again, there’s obviously still very healthy demand for crude.”
Oil in New York has traded above $60 a barrel and the international benchmark Brent has held above $66 since December as OPEC and allied suppliers capped output and pledged to do so for the remainder of the year. Yet, higher prices could spur a bounce in U.S. crude production. The Energy Information Administration increased its forecast for American crude output this year to a fresh record-high of 10.27 million barrels a day.
West Texas Intermediate for February delivery advanced to $63.43 a barrel at 4:45 p.m. after settling at $62.96 a barrel on the New York Mercantile Exchange.
Brent for March settlement climbed $1.04 to end the session at $68.82 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.95 to March WTI.
U.S. crude stockpiles at the Cushing, Oklahoma, pipeline hub probably fell by 1.5 million barrels last week, according to a forecast compiled by Bloomberg. Inventories at Cushing dipped below 50 million barrels through the week ended Dec. 29, the first time they have dropped below that level since February 2015, according to the most recent Energy Information Administration data.
The API report was also said to show that Cushing stockpiles fell by 2.52 million barrels last week. Gasoline inventories climbed by 4.34 million barrels and distillate supplies increased by 4.69 million.
“Production cuts and demand are continuing to rebalance the market,” Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut, said by telephone.
OPEC supply curbs should create oil price stability in 2018 and prices might hit $70, according to Nigeria’s NNPC. Iranian Oil Minister Bijan Namdar Zanganeh cautioned that OPEC doesn’t want to see Brent above $60 because it may entice American shale explorers to boost production. The growth in shale output will keep prices from rising much, Christof Ruehl, head of research at Abu Dhabi Investment Authority, said at a conference in Abu Dhabi.