Wednesday, March 13, 2019
Crude rose for a third day after an industry report showed an unexpected drop in U.S. stockpiles at a time when the world’s top producers are said to be looking at a plan to extend their output curbs.
(Bloomberg) — Crude rose for a third day after an industry report showed an unexpected drop in U.S. stockpiles at a time when the world’s top producers are said to be looking at a plan to extend their output curbs.
Futures in New York added as much as 0.7 percent, rising above $57 a barrel. U.S. crude inventories declined 2.58 million barrels last week, the American Petroleum Institute was said to report, even as a government report due Wednesday is expected to show an increase in stockpiles. OPEC and its allies are discussing Saudi Arabia’s proposal to extend the deal on production cuts through the second half of the year, Interfax news service reported.
Oil has rallied more than 25 percent this year as the Organization of Petroleum Exporting Countries and its partners continue to show their commitment to restrain production even in the face of criticism by President Donald Trump. Adding to the market’s bullish tone, the U.S. government lowered its output forecast for the first time in six months on the back of slowing American drilling activity.
“As bullish factors including API data and Saudi proposal to extend cuts are placing upward pressure, crude markets may see an upside swing in the short term,” said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp. in Tokyo. Still, Trump’s tweet in late February aimed at keeping OPEC and higher oil prices in check has a “psychological effect” on investors and could limit gains, Nogami said.
West Texas Intermediate for April delivery climbed as much as 41 cents to $57.28 a barrel on the New York Mercantile Exchange and traded at $57.24 at 4:03 p.m. in Singapore. The contract added 8 cents to $56.87 on Tuesday.
Brent for May settlement rose 21 cents to $66.88 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 9 cents to $66.67 on Tuesday. The global benchmark crude traded at a $9.33 premium to WTI for the same month.
If a decline in U.S. crude inventories is confirmed by the Energy Information Administration’s report, it would be a second drop in three weeks. The median forecast of analysts surveyed by Bloomberg is for a 3 million-barrel increase in nationwide stockpiles.
The OPEC coalition may make a decision on the extension of the curbs in April, Interfax reported, citing an unidentified person close to the producer group. The deal may be extended under current conditions on output cuts or slightly relaxed. Saudi Arabia is already pumping less than required in the pact signed in December, and is said to plan extending its deeper-than-agreed cuts into a second month.
The U.S. Energy Information Administration in its monthly Short-Term Energy Outlook trimmed its 2019 forecast for the nation’s crude output to 12.3 million barrels a day — 110,000 barrels-a-day lower than it had forecast previously. In 2020, production is expected to reach 13.03 million barrels a day — 170,000 barrels a day lower than last month’s estimate. That’s after the nation’s rig count tumbled to a 10-month low last week, suggesting the rate of production growth could slow.
–With assistance from James Thornhill.To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at firstname.lastname@example.org To contact the editors responsible for this story: Pratish Narayanan at email@example.com Ovais Subhani, Serene Cheong
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