Crude advanced after an industry report was said to show U.S. crude inventories unexpectedly declined last week.
Futures in New York climbed from the settlement Tuesday after the American Petroleum Institute was said to have reported U.S. crude inventories tumbled 2.74 million barrels last week. That would be the largest decline since early January if confirmed by a federal tally scheduled for release on Wednesday. A Bloomberg survey ahead of the government report showed stockpiles probably rose by 3.25 million barrels.
“That’s a surprise draw and if that’s confirmed by the EIA , we could get another $1 increase tomorrow,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said.
Earlier in the session, crude rallied as a special committee appointed by the OPEC-led group to oversee their historic accord said global crude supplies will come into balance with demand by the end of September, sooner than previous forecasts.
Record U.S. crude production, coupled with mounting levels of stored supplies in American tanks and terminals, has so far forestalled any major price breakouts. Futures have traded in less than a $4-range this month. Yet, Citigroup Inc. says the recent “sideways trading” is unlikely to last as the market moves closer to balance.
Meanwhile, Saudi Arabian Crown Prince Mohammed bin Salman said during a White House meeting with Trump on Tuesday that he sees a “stable” oil market ahead, adding that the kingdom has an 84-year supply of crude.
The OPEC-allied nations are “pretty much sticking to their guns and they continue to say they are in it until the oversupply is done,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto.
West Texas Intermediate for May delivery, traded at $63.78 a barrel at 4:38 p.m. after settling at $63.54 a barrel. The April WTI contract expired at $63.40 a barrel on the New York Mercantile Exchange, the highest level since Feb. 26.
Brent for May settlement surged $1.37 to settle at $67.42 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $3.88 premium to WTI for the same month.
The special committee established to monitor compliance by the nations aligned with Saudi Arabia and Russia to curb supplies said its time line assumes Libya and Nigeria keep output at February levels and other participants in the deal maintain full adherence, according to the people familiar with the matter who weren’t authorized to discuss it publicly.
U.S. Supply Picture
Inventories held at the key Cushing, Oklahoma, pipeline hub probably rose by 200,000 barrels last week, a forecast compiled by Bloomberg shows.
The API data also was said to show that while overall gasoline and distillate supplies decreased last week, inventories at Cushing rose by 1.64 million barrels. That would be a second straight week of builds at the complex.
“The bottom line is, with oil at these prices, it’s hard to slow down the shale in the U.S.,” said Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital in Miami. Activity in the oil patch is “out of control and you can see it in the output that we’re actually generating.”
Other oil-market news:
Gasoline futures rose 2.1 percent to settle at $1.9659 a gallon on Tuesday, the highest level since August. OPEC and its allies held further discussions about changing the way they measure the impact of their production cuts, including proposals that would affect how quickly they hit their target, according to delegates from the group. Oil explorers will show this week whether their appetite for offshore drilling has returned after years of focusing mostly on land-based shale fields like the U.S. Permian Basin.