Oil held near a three-month high as investors weighed OPEC’s production cuts against estimates of rising crude inventories in the U.S.
Futures fell by 0.4 percent in New York, after gaining around 7 percent since Feb. 11. U.S. crude stockpiles probably increased for a fifth week, rising by 3.1 million barrels, according to a Bloomberg survey before government data on Thursday. Citigroup Inc. boosted its Brent price forecast for this year as output cuts by Saudi Arabia and other OPEC nations shrink global supplies.
Facing a surge in U.S. shale flows, the Organization of Petroleum Exporting Countries and its allies started a fresh round of supply curbs last month that has helped push oil around 23 percent higher this year. Yet the rally has been capped by fears that the U.S.-China trade war will exacerbate a global economic slowdown, and that booming U.S. shale-oil will offset OPEC’s cutbacks.
“We remain broadly constructive, with the Saudis showing that they are committed to bringing the market back to balance, with them cutting output significantly more than they agreed to,” said Warren Patterson, senior commodities strategist at ING Bank NV. “Although there is somewhat of a disconnect between markets, with the U.S. appearing relatively more bearish. We continue to see persistent U.S. crude oil inventory builds.”
West Texas Intermediate for March delivery, which expires Wednesday, slipped 21 cents to $55.88 a barrel on the New York Mercantile Exchange at 10:51 a.m. in London. It gained 0.9 percent on Tuesday to close at the highest level since Nov. 19. The more active April contract fell 13 cents to $56.32.
Brent for April settlement dropped 29 cents to $66.16 a barrel on the London-based ICE Futures Europe exchange. The contract lost 5 cents to settle at $66.45 on Tuesday, snapping a five-day rally. The global benchmark crude was at a $9.84 premium over WTI for the same month.
The Saudis went beyond pledged output reductions in January, but only 10 of 21 nations in the OPEC+ coalition fully complied with the agreed cuts that are aimed at shrinking a global glut, according to Bloomberg estimates.
U.S.-China negotiations resumed Tuesday ahead of a March 1 deadline for higher American tariffs on the Asian country’s goods. The U.S. is asking China to keep the yuan stable as part of the trade negotiations, a move aimed at neutralizing any effort by Beijing to devalue its currency to counter American tariffs, according to people familiar with the talks.
Other oil-market news: Russian President Vladimir Putin and Saudi King Salman Bin Abdulaziz agreed to extend their joint cooperation on the global oil market, according to a statement on the Kremlin’s website. South Korea’s SK Innovation Co., an Asian buyer of North Sea Forties crude, sees a lower probability of purchases if the U.K. and South Korea don’t roll over an existing trade deal before Britain exits the European Union on March 29. Heavy Canadian crude prices widened on Tuesday to the biggest discount against New York futures this year as pipeline operator Enbridge Inc. reported that rationing on its heavy-oil lines would increase next month. The U.S. Energy Information Administration sees crude output at major U.S. shale plays to rise by 84,000 to 8.4 million barrels a day in March.