Oil Pierces 4-Month High

Oil Pierces 4-Month High
Oil held gains after breaching $58 a barrel for the first time this year.

(Bloomberg) -- Oil held gains after breaching $58 a barrel for the first time this year as falling U.S. crude and fuel inventories boosted optimism that a global surplus is shrinking.

Futures were little changed in New York, after gaining 3.9 percent in the previous three sessions to the highest level since mid-November. The U.S. Energy Information Administration reported crude stockpiles declined 3.86 million barrels last week, defying a prediction for an increase in a Bloomberg survey of analysts. Meanwhile, a possible delay in U.K.’s divorce from the European Union eased concerns about the impact on global growth.

Crude’s near 30 percent surge this year has been spurred by output curbs by the Organization of Petroleum Exporting Countries and its allies, and a further tightening of supplies due to American sanctions against Venezuela and Iran. The rally has been limited by record U.S. output. Still, the draw in stockpiles at a time when refinery maintenance usually undercuts demand signals the glut is easing.

“The unexpected decline in American crude stockpiles along with OPEC’s aggressive output cuts are lifting oil prices,” said Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp. in Seoul. “At this point, as the U.K. heads into delaying Brexit, this could keep oil in positive territory as fewer uncertainties will keep investors calm.”

West Texas Intermediate for April delivery traded at $58.40 a barrel on the New York Mercantile Exchange, up 14 cents, at 7:42 a.m. in London. The contract rose $1.39 to $58.26 on Wednesday, the highest close since Nov. 12.

Brent for May settlement added 21 cents to $67.76 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 88 cents to $67.55 on Wednesday. The global benchmark crude traded at a $9.05 premium to WTI for the same month.

Crude inventories in the U.S. dropped, in contrast to a 3-million-barrel increase estimated in a Bloomberg survey. Gasoline stockpiles declined by 4.62 million barrels last week, the steepest decrease since October, according to the EIA. While the nation’s crude production fell by 100,000 barrels last week, the first decline in three months, it remains near an all-time high.

In the U.K., lawmakers rejected the idea of tearing the country out of the European Union with no agreement in place to keep trade flowing and Prime Minister Theresa May was said to plan to ask for an extension to the March 29 Brexit deadline lasting about two months.

--With assistance from James Thornhill.To contact the reporter on this story: Heesu Lee in Seoul at hlee425@bloomberg.net To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Ovais Subhani


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