Hong Kong - Oil extended gains to the highest level in almost a month, with investor focus shifting back to US crude inventories after supply disruptions and optimism over OPEC’s output curbs drove a rally over the past week.
Futures added as much as 0.8% in New York after rising 1.6% on Tuesday. US crude stockpiles declined by 1.83 million barrels last week, the American Petroleum Institute was said to report, while government data on Wednesday is forecast to show they dropped from a record.
Output from the North Sea Buzzard field halted after an unplanned outage, according to a person familiar with the matter.
Oil has regained footing above $50 a barrel after some members of the Organisation of Petroleum Exporting Countries voiced support for an extension to a six-month deal to cut production past June.
Crude was also helped by a disruption in Libya’s biggest field, which has since resumed pumping. OPEC Secretary-General Mohammad Barkindo said Sunday that he is “cautiously optimistic that the market is already rebalancing,” even amid concern that ample US supplies are undermining curbs by other producers.
“The likelihood that the OPEC-led production agreement will be extended for another six months is providing some support to oil,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
“The extent of the recent rally makes the market vulnerable to bad news, especially poor inventory data.”
West Texas Intermediate for May delivery climbed as much as 41 cents to $51.44 a barrel on the New York Mercantile Exchange and was at $51.37 at 07:28. Total volume traded was about 27% below the 100-day average. Prices gained 79c to $51.03 on Tuesday, its highest close since March 7. Prices had dropped below $50 early last month for the first time since December.
Brent for June settlement rose as much as 40c to $54.57 a barrel on the London-based ICE Futures Europe exchange. Prices advanced $1.05 to $54.17 on Tuesday. The global benchmark traded at a premium of $2.67 to WTI.
US crude inventories probably dropped by 150 000 barrels to 533.8 million barrels in the week ended March 31, according to a Bloomberg survey before an Energy Information Administration report. Nationwide stockpiles have gained by about 55 million barrels since the start of this year.
Permian drillers’ newfound ability to run multiple rigs in very close proximity has boosted the land’s value this year to between $175 000 and $220 000 an acre, according to Mike Kelly of Seaport Global Securities and Bill Marko of Jefferies. China became the biggest buyer of US crude oil in February, surpassing Canada, at a time when OPEC is cutting back output.