Oil rose after an industry report signaled an unexpected drop in U.S. crude inventories last week, while data showed China’s economy rebounded in the first quarter.
Prices advanced as much as 0.9 percent in New York, while in London Brent futures reached a five-month high. U.S. stockpiles declined by 3.1 million barrels last week, the American Petroleum Institute was said to report. If confirmed by government data due later on Wednesday, that would be the first decline in four weeks and defy analyst forecasts for inventories to rise. China reported first-quarter economic growth that beat estimates, adding to crude’s upward impetus.
Oil has climbed more than 40 percent this year as the Organization of Petroleum Exporting Countries and its allies reduced production and U.S. sanctions on Iran and Venezuela further tightened supply. The cuts have been so successful they’ve spurred speculation the cartel risks letting crude surge too high, which would likely prompt a backlash from President Donald Trump.
“Obviously the voluntary and involuntary production cuts have tightened the market, with demand seasonally accelerating thanks to the driving season,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “Over the last 48 hours the main drivers have been better-than-expected Chinese data, indicating that the financial and monetary stimulus is working, and supportive data from the API — which needs to be confirmed by the EIA.”
West Texas Intermediate for May delivery rose as much as 56 cents, or 0.9 percent, to $64.61 a barrel on the New York Mercantile Exchange, trading for $64.46 as of 10:41 a.m. in London.
Brent for June settlement added as much as 52 cents to $72.24 a barrel on the London-based ICE Futures Europe exchange, the highest since Nov. 8. The global benchmark crude was at a premium of $7.52 to WTI for the same month.
U.S. crude stockpiles probably grew by 2.3 million barrels to 458.9 million barrels in the week through April 12, according to the median estimate in a Bloomberg survey. The official data is due late morning in Washington.
While fears about the global economy have restrained the rally in oil prices this year, there have been recent signs that growth is holding up better than expected. China’s first-quarter gross domestic product rose 6.4 percent from a year earlier, beating the 6.3 percent median estimate in a Bloomberg survey. Industrial production jumped 8.5 percent year-on-year in March, much higher than forecast.
Other oil-market news: Saudi Aramco is in “serious discussions” to purchase as much as 25 percent of the refining and petrochemicals businesses of India’s Reliance Industries, the Times of India reported. White House economic adviser Larry Kudlow said “very good progress” was made on multiple fronts in trade talks with China. Petrobras is free to set prices for its fuel, Brazil’s economy minister said after the company lost about $8 billion of its value over fears of government meddling.