MW: Oil futures waver after supply-driven rally loses steam
Oil edged lower in choppy trade Thursday, as investors weighed an unexpected decline in U.S. crude inventories against growing doubts that major oil producers will agree to curb their output.
Brent crude LCOM6, -0.70% , the global oil benchmark, fell 23 cents, or 0.6%, to $39.61 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLK6, -0.58% were down 28 cents, or 0.7%, at $37.47 a barrel. Both benchmarks rallied more than 5% on Wednesday after the U.S. data was released.
U.S. crude-oil supplies fell by 4.9 million barrels last week, the Energy Information Administration said Wednesday. The prior week, crude stockpiles stood at the highest level in more than 80 years. Analysts surveyed by The Wall Street Journal had expected stockpiles to rise by 3.3 million barrels.
“It has been a long time since the EIA weekly U.S. crude oil stock figures have given the market something bullish to work with,” analysts at PVM brokerage said in a note to clients.
However, other numbers in the report were mostly bearish, PVM said. Gasoline stocks rose by 1.4 million barrels following six consecutive weeks of declines while inventories at the key crude delivery hub of Cushing, Oklahoma, rose 357,000 barrels last week, the EIA said. U.S. crude oil inventories remain at historically high levels for this time of year, the EIA added.
Oil prices have rallied in the past two months on hopes that major producers will agree to limit their output in a bid to alleviate the global oversupply and support prices. Several key players, including Saudi Arabia and Russia, are expected to meet on April 17 in Doha, Qatar, to discuss the plan.
Earlier this week, oil prices fell after Saudi Arabia said the kingdom will freeze its oil production only if Iran agrees to curb its output. Tehran, however, has vowed to keep ramping up production until output rises to pre-sanction levels. There are also growing doubts about Libya’s attendance of the talks.
“Without the participation of the two countries with the most capacity headroom, a production ‘freeze’ is a misnomer at best,” said Michael Hsueh, analyst at Deutsche Bank. “Such an agreement would do little to change the supply outlook.”
Nymex reformulated gasoline blendstock for May RBK6, -0.24% — the benchmark gasoline contract — fell 0.37 cent, or 0.3%, to $1.391 a gallon.
