(Bloomberg) - Oil closed near $54 a barrel in New York as estimates of record U.S. stockpiles overshadow OPEC’s efforts to balance the market.
Members of the Organization of Petroleum Exporting Countries are meeting more than 90 percent of the curbs they agreed to make, the group’s Secretary General Mohammad Barkindo, said in Abuja, Nigeria. The United Arab Emirates is working to ensure total compliance with the deal between the group and 11 other countries, Al Bayan newspaper reported Saturday, citing the country’s OPEC governor. Meanwhile, U.S. inventories probably climbed to an all-time high last week, according to a Bloomberg survey before the government’s next report on Wednesday.
While U.S. inventory gains have begun to slow, Citigroup Inc. sees OPEC needing to extend cuts beyond the planned six-month duration to trim the global glut it created by boosting output prior to the deal. A resurgence of exploration and production from American shale plays has kept prices in a tight range above $50 this year. Money managers boosted their bets on rising oil prices to a record on speculation that OPEC’s production curbs will eventually ease the global supply glut.
"The market has a lot of length, which is due to exuberance regarding OPEC," Kyle Cooper, director of research with IAF Advisors in Houston, said by telephone. "It remains to be seen if the cuts will have an impact on inventories."
West Texas Intermediate for April delivery rose 6 cents to $54.05 a barrel on the New York Mercantile Exchange. Total volume traded was about 28 percent below the 100-day average. Prices are up 65 percent from a year ago.
Brent for April settlement declined 6 cents to $55.93 a barrel on the London-based ICE Futures Europe exchange, closing at a $1.88 premium to WTI. April Brent expires Tuesday and the more-active May contract climbed 11 cents to $56.42.
U.S. crude stockpiles rose to 518.7 million barrels in the week ended Feb. 17, the highest level in weekly data going back to 1982, according to the EIA. Production climbed above 9 million barrels a day to the highest since April, the agency said.
The U.S. oil rig count rose by five to 602 last week, according to Baker Hughes Inc. data. Rigs have increased by 77 this year, and producers have added 286 machines since the number bottomed out in May.
Hedge funds increased their net-long position in WTI to 413,637 in the week ended Feb. 21, the most in data going back to 2006, U.S. Commodity Futures Trading Commission data show.
"We’re loaded up on the long side, with more than 400,000, which should push us higher," Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. "We’ll probably hit a new, multi-month high in the next couple of days, but probably not go much higher."
- With assistance from Grant Smith.To contact the reporter on this story: Mark Shenk in New York at email@example.com To contact the editors responsible for this story: Reg Gale at firstname.lastname@example.org Carlos Caminada, Stephen Cunningham
Copyright 2017 Bloomberg News.
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