BLBG: Oil Holds Biggest Gain in 6 Weeks on Record U.S. Refinery Runs
Oil held gains after advancing the most in almost six weeks as U.S. refiners processed a record amount of crude, while OPEC and other producing nations trim output to stabilize the market.
Futures were little changed in New York after climbing 2.8 percent on Wednesday following an Energy Information Administration report that U.S. refineries used 17.1 million barrels a day of crude last week, the most in weekly data compiled since 1989. The United Arab Emirates and other Gulf producers have complied with cuts agreed under the OPEC output deal, U.A.E. Energy Minister Suhail Al Mazrouei said.
Oil has been unable to sustain its rally above $55, driven by the deal between the Organization of Petroleum Exporting Countries and 11 other nations to pump less crude, amid concern that rising prices will spur more supply. While Middle East producers including Saudi Arabia have signaled theyâ€™re sticking to the pledged reductions, the U.S. recently raised this yearâ€™s output forecast and explorers have added drilling rigs for 10 straight weeks.
â€śSaudi Arabia and other core members of the Organization of Petroleum Exporting Countries remain most committed to the cut in supplies,â€ť said Carsten Menke, commodities analyst at Julius Baer Group Ltd. in Zurich.
West Texas Intermediate for February delivery was at $52.32 a barrel on the New York Mercantile Exchange, up 7 cents, at 9:32 a.m. in London. Total volume traded was about 15 percent below the 100-day average. The contract gained $1.43 to $52.25 on Wednesday, rising the most since Dec. 1.
Brent for March settlement was 26 cents higher at $55.36 a barrel on the London-based ICE Futures Europe exchange. The contract climbed $1.46, or 2.7 percent, to $55.10 on Wednesday. The global benchmark was at a premium of $2.22 to March WTI.
See also: Crude open interest hits fresh highs as traders put faith in OPEC
U.S. crude inventories expanded by 4.1 million barrels last week, the EIA reported on Wednesday. Analysts surveyed by Bloomberg had projected a 1.5 million-barrel gain. Crude production increased by 176,000 barrels a day to 8.95 million barrels a day, the highest level since April.
Kuwait has cut output by 133,000 barrels a day to 2.7 million barrels a day, Oil Minister Essam Al-Marzouk said at a conference in Abu Dhabi.
Iraq is in talks with international companies to trim production in order to comply with the OPEC accord, and will arrange for the semi-autonomous Kurdish region to reduce its output, Oil Minister Jabbar al-Luaibi said at the same conference.
Oil at $50 a barrel is too low for most producing countries, U.A.E.â€™s Al Mazrouei said at in Abu Dhabi on Wednesday.
Kazakhstan will increase crude production this year while still meeting its obligations under an OPEC-led oil-supply deal to curb output through June, the government said.