Futures in London shifted between a little over $91 and $90, after a tumultuous start to the week that has seen prices retreat after hitting multiyear highs. Crude futures, as well as other commodities, are in backwardation, indicating tight supply, and vital North Sea crudes are being bid at record premiums.
On Tuesday, the U.S. Energy Information Administration said global oil stockpiles will decline in January and February, in part because it revised last month’s consumption sharply higher. That was tempered, however, by a forecast that stockpiles will then increase for the rest of the year, driven in part by growth in American crude production.
Oil’s sizzling rally has paused this week after a run of seven weekly gains propelled prices to the highest since 2014. A flurry of diplomacy in Vienna has spurred renewed optimism of a breakthrough in talks to resurrect Iran’s nuclear deal. Meanwhile, France’s President Emmanuel Macron suggested the political tension around Ukraine could ease.
“Oil-price sentiment has thus far been dominated by a tightening imbalance,” said Stephen Brennock, an analyst at PVM Oil Associates.
White House Economic Adviser Jared Bernstein said in an interview on CNN that releasing more crude reserves is an “option that can be put on the table as needed” to help tackle gasoline prices. That tactic, however, has had little impact so far, with motor fuel rising to the highest in more than seven years.
The American Petroleum Institute reported another drop at the key storage hub at Cushing, while signaling that nationwide inventories shrunk by 2 million barrels, according to people familiar with the data. Official figures from the EIA are due late Wednesday.
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