Oil Rally Extends Pause
(Bloomberg) -- Oil’s rally paused for a second day as oversupply concerns resurfaced after U.S. crude inventories jumped the most since January.
Futures in New York edged lower for a second day after climbing 5.5 percent in the three days through Tuesday. American stockpiles rose by 7.24 million barrels last week, according to Energy Information Administration figures, topping analyst and industry estimates. Optimism the U.S. and China are getting closer to a trade agreement likely prevented steeper declines.
The Saudi Arabia-led supply cuts by the Organization of the Petroleum Exporting Countries and its allies have provided the biggest impetus for oil’s 37 percent advance this year. In recent days, OPEC members Iran and Nigeria have voiced support for extending the output reductions beyond the end of June. An apparent stabilization in China’s economy and the trade detente between the two biggest economies are improving the demand outlook.
“The sharp and unexpected rise in U.S. crude stocks took only a few cents off Brent and WTI at Wednesday’s close, which indicates that price-supportive factors are gathering strength,” said Vandana Hari, founder of Vanda Insights, a Singapore-based provider of oil market analysis. “Signs the U.S. and China are closing in on a trade deal are buoying sentiment.”
WTI for May delivery declined by 10 cents, or 0.2 percent, to $62.36 a barrel on the New York Mercantile Exchange as of 8:01 a.m. in London after falling as much as 15 cents earlier. The contract closed down 0.2 percent on Wednesday.
Brent for June settlement traded 5 cents lower at $69.26 a barrel on the London-based ICE Futures Europe exchange after advancing as much as 17 cents earlier. The global benchmark crude was at a premium of $6.82 to WTI.
U.S. inventories expanded as domestic production climbed to a record and exports fell for a second week, the EIA data showed. Distillate stockpiles fell faster than normal for the time of year and gasoline supplies contracted for a seventh week.
The trade deal that the U.S. and China are crafting would give Beijing until 2025 to meet commitments on commodity purchases and allow American companies to wholly own enterprises in the Asian nation, according to three people familiar with the talks. Negotiators are “making good headway,” said Larry Kudlow, President Donald Trump’s top economic adviser. “But we’re not there and we hope this week to get closer,” he said.
--With assistance from James Thornhill.To contact the reporter on this story: Saket Sundria in Singapore at firstname.lastname@example.org To contact the editors responsible for this story: Pratish Narayanan at email@example.com Andrew Janes, Heesu Lee
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