Oil extended gains from the highest close in more than three years as U.S. industry data signaled crude stockpiles dropped an eighth week.
Futures climbed as much as 1.1 percent in New York after rising 2.5 percent the previous two sessions. U.S. crude inventories fell by 11.2 million barrels last week, the American Petroleum Institute was said to report on Tuesday. If the draw is replicated in Energy Information Administration data Wednesday, it would be the biggest decline for this time of the year since 1999.
Oil is continuing its advance after a second annual gain as the Organization of Petroleum Exporting Countries and its allies trim supply to drain a global glut. The group is facing the challenge of rising U.S. crude output, which the EIA expects to rise above 10 million barrels a day as soon as next month, before eventually topping 11 million in November 2019.
“It’s not completely unexpected given the price momentum,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said of oil’s latest gains. But “the shale rebound is also for real” and there’s a risk of a “massive price slump.”
West Texas Intermediate for February delivery rose as much as 71 cents to $63.67 a barrel on the New York Mercantile Exchange, and was at $63.44 at 1:44 p.m. in London. Total volume traded was about 23 percent above the 100-day average. Prices advanced $1.23 to $62.96 on Tuesday, the highest close since December 2014.
Brent for March settlement climbed as much as 55 cents, or 0.8 percent, to $69.37 a barrel on the London-based ICE Futures Europe exchange after advancing 1.5 percent on Tuesday to the highest since December 2014. The global benchmark crude was at a premium of $5.85 to March WTI.
U.S. crude inventories probably dropped by 3.75 million barrels last week, according to a Bloomberg survey before the EIA report. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, probably slid by 1.5 million barrels, an estimate compiled by Bloomberg shows.
OPEC members are not keen on Brent prices above $60 a barrel because of the potential for more shale output, Iran’s Oil Minister Bijan Namdar Zanganeh said, according to the ministry’s news service Shana. Goldman Sachs Group Inc. expects further attempts to talk down prices if oil climbs above $70 a barrel, Jeff Currie, the bank’s head of commodities research, said in a Bloomberg TV interview. Citigroup Inc. said that wildcards including war and Middle East tensions are driving crude toward $80 a barrel. The Trump administration is ruling out plans to sell new drilling rights off the coast of Florida, including eastern Gulf of Mexico waters coveted by oil companies, amid pressure from Republican Governor Rick Scott.