Oil held gains near $61 a barrel on signs of robust fuel consumption in the U.S. and as OPEC’s compliance with its pledged output cuts soared to a new record.
Futures added 0.2 percent in New York, after rebounding from two days of declines on Wednesday. American gasoline inventories sank the most since September last week and product demand reached the highest since January, government data showed. The adherence to supply curbs by the Organization of Petroleum Exporting Countries climbed to 147 percent in February, a fourth consecutive month of record compliance.
Crude has struggled to recover to levels seen in January after a broader market slump had dragged West Texas Intermediate to below $60 a barrel last month. OPEC for the first time expects new oil supplies from the U.S. and other producers to exceed growth in demand this year. That shows how expanding American output continues to remain the biggest challenge to the group and its allies, which are seeking to drain a global oversupply.
“While crude oil inventories in the U.S. recorded another strong gain last week, the fall in gasoline and distillate stockpiles provided some positives for investors,” said Daniel Hynes, a senior commodities strategist at Australia & New Zealand Banking Group. “I still think the market will remain tight this year, with inventories falling over the next three to six months.”
WTI for April delivery traded at $61.07 a barrel on the New York Mercantile Exchange, up 11 cents at 8:41 a.m. in London. The contract rose 25 cents to $60.96 on Wednesday. Total volume traded was about 39 percent below the 100-day average.
Brent for May settlement added 6 cents to $64.95 a barrel on the London-based ICE Futures Europe exchange. Prices on Wednesday rose 25 cents, or 0.4 percent, to $64.89. The global benchmark crude traded at a $3.80 premium to WTI for the same month.
While total crude inventories in the U.S. gained 5 million barrels last week, an increase had been expected as refineries head into seasonal maintenance work. Instead, the declines in oil-product stockpiles lifted investor sentiment. Motor fuel held in storage fell 6.27 million barrels last week, while distillate inventories dropped to 133.1 million, the lowest level since December, an Energy Information Administration report showed.
Still, surging U.S. output continued to stoke fears. American production rose to 10.4 million barrels a day, the highest in weekly data going back to 1983, according to the EIA. In OPEC’s monthly market report, the group raised its expectation for supply growth from the U.S. and other producers to 1.66 million barrels a day. That would more than cover daily demand that’s seen climbing by 1.6 million barrels.
Canadian oil producers found a way to access the growing Asian energy market without the controversial Trans Mountain pipeline. A cargo of heavy crude from Alberta’s oil sands was said to have been sent to China after being railed to a terminal in Portland, Oregon. Statoil ASA, Norway’s biggest petroleum company, will change its name to Equinor as it seeks to broaden its energy reach beyond oil and gas production. Gasoline futures in New York lost 0.2 percent to $1.9202 a gallon, after gaining 2 percent Wednesday.