Oil Rally Wanes
(Bloomberg) -- Oil pulled back from a six-month high as an industry report signaling a gain in U.S. crude inventories partly offset concerns over America’s campaign to halt Iranian exports.
Futures in New York fell as much as 0.7 percent, after climbing 3.6 percent over the previous two sessions. Crude stockpiles rose by 6.86 million barrels last week, the American Petroleum Institute was said to report on Tuesday. Saudi Arabia was said to be planning a cautious response to tighter U.S. sanctions on Iran, and will hold off on significant supply shifts until it sees actual declines in the Islamic Republic’s shipments.
Oil has rallied further after posting its best quarter since 2009 as the Saudis led output cuts by a coalition of producers including Russia to avoid a global glut. Disruptions in members of the Organization of Petroleum Exporting Countries such as Venezuela, Libya and Nigeria have also buoyed prices, with the White House adding to the supply crunch by refusing to extend sanctions waivers beyond May 2 for importing oil from Iran.
“The estimated gain in American inventories is pacing down the rally we’ve seen earlier,” said Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp. in Seoul. “Oil’s expected to stay steady until we see more details on how the Saudis and its allies will bump up their output, going a step further from just signaling a boost.”
WTI for June delivery declined 35 cents, or 0.5 percent, to $65.95 a barrel on the New York Mercantile Exchange at 7:33 a.m. in London after dropping as much as 43 cents earlier. Prices gained $2.30 over the previous two sessions to $66.30 on Tuesday, the highest close since Oct. 29.
Brent for June settlement dropped 34 cents to $74.17 a barrel on the London-based ICE Futures Europe exchange. It increased 3.5 percent in the first two days of the week. The global benchmark crude was at a premium of $8.22 to WTI.
While the API reported a gain in nationwide inventories, its data showed a 389,000 barrel drop in the hoard at Cushing, Oklahoma. That would be a third consecutive draw at the U.S. storage hub if confirmed by government figures due Wednesday. The median forecast of analysts in a Bloomberg survey signals American crude stockpiles may have risen by 1 million barrels last week.
In Saudi Arabia, people familiar with policy deliberations said the kingdom is ready to help fill the void left by Iranian oil supplies, but it doesn’t plan any radical moves. The caution of OPEC’s de-facto leader stems from its experience last year when President Donald Trump backtracked on his initial pledge to completely halt Iranian exports by granting exemptions to eight buyers. The Saudis in the meantime had boosted production to an all-time high.
The International Energy Agency also said it’s ready to act if necessary to ensure the market is well-supplied, according to a statement. The Paris-based IEA said global oil markets are currently at “comfortable” levels of spare capacity, and that it will continue to monitor closely and remain engaged with major producers and consumers.
--With assistance from James Thornhill.To contact the reporter on this story: Sharon Cho in Singapore at firstname.lastname@example.org To contact the editors responsible for this story: Pratish Narayanan at email@example.com Ovais Subhani, Andrew Janes
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.