January 24, 2018, by Grant Smith and Alex Longley
Oil’s advance slowed after prices hit a new three-year high amid signs that U.S. crude stockpiles increased last week.
Futures were little changed in New York after closing on Tuesday at the highest level since December 2014. Industry data signaled inventories rose by 4.76 million barrels last week, which will be the first gain in 10 weeks if confirmed by a government report on Wednesday. The Energy Information Administration is forecast to show supplies slid by 2 million barrels.
Oil has extended a two-year gain as OPEC and its allies trim output to reduce a global glut. While rising U.S. production is seen as a challenge to those supply cuts, Qatar’s Energy Minister Mohammed Al Sada said the market can absorb shale growth and will re-balance in the second half of 2018. The International Monetary Fund said the global economy this year will expand at the fastest pace since 2011.
“Let’s see if markets are able to push above $65 after today’s inventory data,” said Hans van Cleef, senior energy economist at ABN Amro Bank NV. “Another disappointment is possible, despite a ninth week of inventory declines in a row. So, the risk of a profit-taking way is still high.”
West Texas Intermediate for March delivery was at $64.48 a barrel on the New York Mercantile Exchange, up 1 cent, at 9:49 a.m. in London. Total volume traded was about 7 percent below the 100-day average. WTI closed at $64.47 on Tuesday after advancing for a second session.
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Brent for March settlement lost 27 cents to $69.69 a barrel on the London-based ICE Futures Europe exchange, after rising 1.4 percent on Tuesday. The global benchmark crude traded at a premium of $5.26 to WTI.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, decreased by 3.57 million barrels last week, the American Petroleum Institute was said to report Tuesday. Gasoline inventories rose by 4.12 million barrels, the API said.
OPEC’s pact to cut supply is more about oil’s price and near-term revenues rather than reducing inventories to their five-year average, Citigroup Inc. analysts including Chris Main said in a note. Falling heavy crude output in Venezuela could tempt other producers within OPEC with spare capacity to raise production this year, BMI Research wrote in a Jan. 22 note.