Oil Holds Gain Near $52
(Bloomberg) -- Oil held gains near $52 a barrel on optimism the OPEC+ coalition’s production curbs will clear a supply glut that’s already showing signs of decreasing.
Futures in New York were little changed after settling 3.2 percent higher on Tuesday. U.S. crude stockpiles fell by 560,000 barrels last week, an industry report was said to show before government data due Wednesday that’s forecast to show a bigger drop. That’s after Saudi Arabia’s energy minister said he was sure inventories will start to “return to normal averages and this will increase confidence” in the market.
Crude has managed to stay above $50 a barrel for a week, holding on to its advance this year after a near 40 percent collapse last quarter. Oil’s recent momentum was spurred by improving trade relations between the U.S. and China as well as 1.2 million barrels a day of pledged output curbs by Saudi Arabia, Russia and other major exporters that began in January. Still, prices remain more than 30 percent below a four-year high in early October.
“Oil’s taking a breather as prices above $50 a barrel seems to be giving comfort to countries like the U.S. and Russia,” Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone. “Crude’s being driven more by external factors these days such as improving trade ties between the U.S. and China, rather than by fundamental demand-supply elements.”
West Texas Intermediate for February delivery was at $52.19 a barrel on the New York Mercantile Exchange, up 8 cents, at 7:54 a.m. in London. Futures climbed $1.60 to $52.11 on Tuesday, rebounding from a 4 percent decline over the previous two sessions.
Brent for March settlement gained 13 cents to $60.77 a barrel on the London-based ICE Futures Europe exchange. The contract closed 2.8 percent higher on Tuesday. The global benchmark crude traded at a premium of $8.29 a barrel to WTI for the same month.
Saudi Arabia’s Energy Minister Khalid Al-Falih said he’s confident the output curbs pledged by the Organization of Petroleum Exporting Countries and its allies will have a “strong impact” on the market. He has earlier said the group will do more if needed and that the reductions are a “lifeline” to U.S. shale drillers.
In America, nationwide crude inventories probably declined by 2.5 million barrels last week, according to a Bloomberg survey. If confirmed by Energy Information Administration data on Wednesday, that will keep inventories near the lowest level since early November. Meanwhile, the American Petroleum Institute was said to report stockpiles at the storage hub in at Cushing, Oklahoma, also dropped.
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