Oil prices hold biggest gain in six weeks amid record US refinery runs
Oil has been unable to sustain its rally above $55, driven by the deal between Opec and 11 other nations to pump less crude, amid concern that rising prices will spur supply
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Hong Kong/ Sydney: Oil held gains after advancing the most in almost six weeks as US refiners processed a record amount of crude, while the Organisation of Petroleum Exporting Countries (Opec) and other oil producing nations trim output to stabilize the market.
Futures were little changed in New York after rising 2.8% on Wednesday, even as US stockpiles and production increased. US refineries used 17.1 million barrels a day of crude last week, the most in weekly data compiled by the Energy Information Administration (EIA) since 1989.
The United Arab Emirates (UAE) and other Gulf producers have complied with cuts agreed under the Opec output deal, UAE energy minister Suhail Al Mazrouei said.
Oil has been unable to sustain its rally above $55, driven by the deal between the Opec and 11 other nations to pump less crude, amid concern that rising prices will spur more supply. While Middle East producers including Saudi Arabia have signalled they’re sticking to the pledged reductions, the US recently raised this year’s output forecast and explorers have added drilling rigs for 10 straight weeks.
“There are short-term factors at play at the moment, we still need time to see if Opec delivers on its cuts,” said Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore. “Recent US data shows the consumption of crude oil is very healthy. The rebalancing story is one of the drivers that should push prices higher into the end of the year.”
West Texas Intermediate for February delivery was at $52.18 a barrel on the New York Mercantile Exchange, down 7 cents, at 8.12 am in London. Total volume traded was about 43% below the 100-day average. The contract gained $1.43 to $52.25 on Wednesday, rising the most since 1 December.
Brent for March settlement was 10 cents higher at $55.20 a barrel on the London-based ICE Futures Europe exchange. The contract climbed $1.46, or 2.7%, to $55.10 on Wednesday. The global benchmark was at a premium of $2.19 to March WTI.
US crude inventories expanded by 4.1 million barrels last week, the EIA reported on Wednesday. Analysts surveyed by Bloomberg had projected a 1.5 million barrel gain. Crude production increased by 176,000 barrels a day to 8.95 million barrels a day, the highest level since April. Bloomberg