Oil Gains as U.S. Stockpiles Fall While IEA Sees OPEC Cutting
Oil recovered after the biggest drop in more than a week as industry data showed U.S. crude stockpiles declined, while OPEC and other producing nations trim output to ease a global glut.
Futures rose as much as 1.4% in New York after sliding 2.7% on Wednesday amid a surge in the dollar. U.S. crude supplies fell by 5.04 MMbbl last week, the American Petroleum Institute was said to report. Government data Thursday is also forecast to show a decline. Production cuts by OPEC won’t necessarily trigger a “bonanza” of U.S. shale and other supply, the International Energy Agency said.
Oil has held above $50/bbl since OPEC and nations including Russia agreed late last year to trim supply by about 1.8 MMbpd to reduce bloated global inventories. While producers from Saudi Arabia to Iraq have signaled they’re implementing the reductions, the IEA predicted a rebound in U.S. shale output as prices rise.
“If OPEC does implement the deal for six months, the market will tighten,” Neil Atkinson, head of the IEA’s oil markets and industry division, said by phone from Paris. At the same time, “anyone who thinks they can get a free ride needs to think again.”
West Texas Intermediate for February delivery, which expires Friday, rose as much as 73 cents to $51.81 on the New York Mercantile Exchange and was at $51.44 at 11:54 a.m. in London. Total volume traded was about 12% below the 100-day average. The contract lost $1.40 to $51.08 on Wednesday, the most since Jan. 9. The more-active March futures climbed 45 cents to $52.34.
U.S. Stockpiles
Brent for March settlement added as much as 85 cents, or 1.6%, to $54.77/bbl on the London-based ICE Futures Europe exchange. The contract dropped $1.55, or 2.8%, to $53.92 on Wednesday. The global benchmark traded at a premium of $2.09 to March WTI.
As supply curbs by OPEC and Russia drain a global glut, rising prices will spur drilling by U.S. shale explorers that are more efficient after the two-year downturn, said the IEA. The agency had previously seen American production stagnating in 2017.
Source: www.worldoil.com
