Oil wavers after U.S. stockpile data; OPEC meeting draws closer
Oil prices swung between gains and losses in North American trading on Wednesday, after data showed U.S. crude stockpiles fell for the seventh week in a row and as investors awaited a decision by major crude producers on whether to extend their current production agreement.
The U.S. West Texas Intermediate crude July contract added 9 cents, or around 0.2%, to $51.55 a barrel by 10:35AM ET (14:35GMT). Prices were at around $51.51 prior to the release of the inventory data after hitting its strongest since April 19 at $51.88.
Elsewhere, Brent oil for July delivery on the ICE Futures Exchange in London tacked on 18 cents to $54.33 a barrel, after climbing to its highest since April 19 at $54.62.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 4.4 million barrels in the week ended May 19, the seventh weekly decline in a row.
Market analysts’ expected a crude-stock decline of around 2.4 million barrels, while the American Petroleum Institute late Tuesday reported a supply-drop of 1.5 million barrels.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 741,000 barrels last week, the EIA said.
Total U.S. crude oil inventories stood at 516.3 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.
The report also showed that gasoline inventories declined by 787,000 barrels, compared to expectations for a fall of about 1.1 million barrels.
For distillate inventories including diesel, the EIA reported a decline of 485,000 barrels.
Oil was higher in overnight trade after a joint OPEC and non-OPEC committee recommended a nine-month extension to the production cut agreement that is set to expire in June.
In a statement, the Organization of the Petroleum Exporting Countries and non-OPEC producers who have taken part in the agreement said the recommendation “reaffirms the commitment of OPEC and participating non-OPEC countries to continue to cooperate for the benefit of producers and consumers alike.”
A final decision will be taken by the oil cartel on Thursday.
In November last year, OPEC and 11 other non-OPEC producers, including Russia, agreed to cut output by about 1.8 million barrels per day between January 1 and June 30.
So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya, and a relentless increase in U.S. shale oil output.
The U.S. rig count rose for the 18th week in a row to the highest level since April 2015 last week, implying that further gains in domestic production are ahead.
Elsewhere on Nymex, gasoline futures for June inched down 0.2 cents, or 0.1%, to $1.662 a gallon, while June heating oil advanced 0.9 cents to $1.616 a gallon.
Natural gas futures for July delivery slumped 3.1 cents to $3.281 per million British thermal units.