MN: Oil Prices Higher Ahead of U.S. Stockpile Data
By Neanda Salvaterra and Jenny W. Hsu
Oil prices held on to small gains Wednesday ahead of official data on U.S. stockpiles.
Brent crude futures for delivery in May rose 0.46% to $56.77 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.37% at $54.22 a barrel.
Investors are betting that oil prices will rise in the future following a move by major oil producers to slash global output, but persistently high U.S. oil inventories are dampening the market's optimism.
Data on U.S. crude production and inventory levels are due from the U.S. Department of Energy later today. Experts surveyed by The Wall Street Journal anticipate that crude supplies rose by 2.4 million barrels last week.
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 2.5-million-barrel increase in crude supplies.
"The 20 cents that we have this morning, that's nothing," said Olivier Jakob from the Switzerland-based Petromatrix. "The market is waiting for stock reductions that have not been coming."
Crude prices have edged up since late last year when the Organization of the Petroleum Exporting Countries and other external producers including Russia agreed to eliminate roughly 2% of global output. But signs of resurgence in oil production from other producers, including the U.S., are weighing on the market.
"We estimate that OPEC crude production increased over February, rising some 55,000 barrels a day this month vs. January output levels," said JBC Energy analysts in a recent report.
JBC estimated OPEC's compliance rate was about 89% in February "as higher output from Angola, Saudi Arabia, and Ecuador was countered by deeper cuts from Iraq and the U.A.E., among others."
The resurgence in U.S. shale is also casting a shadow over oil prices.
Market observers say even though the current rise in U.S. crude oil output still lags behind the reductions made by OPEC and Russia, the gap could shrink if U.S. production maintains its current rate.
According to oil field services firm Baker Hughes Inc., U.S. producers added five new oil rigs last week. That brings the total figure of active drilling rigs to 602, "the highest number since October 2015, "noted JBC Energy.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 1.41% to $1.71 a gallon. ICE gas oil changed hands at $498.00 a metric ton, up $8.75 from the previous settlement.
Write to Neanda Salvaterra at firstname.lastname@example.org and Jenny W. Hsu at email@example.com