Oil prices extends rally on US inventory optimism before Opec meeting
Oil prices inch toward $69 a barrel after a drop in US petroleum stockpiles stoked optimism as investors await a key Opec meeting
Tokyo: Oil prices extended a rally toward $69 a barrel after a drop in US petroleum stockpiles below a commonly used dividing line for surplus versus deficit stoked optimism as investors await a key meeting of the Organization of Petroleum Exporting Countries (Opec).
Futures in New York rose 0.6% after gaining 2.9% in the previous session. Total US inventories of crude and fuel dropped below the five-year average for the first time since 2014, government data showed Wednesday. That helped take focus away from production, which scaled a fresh record. Attention now turns to whether Opec and its allies will signal an extension of supply cuts at an 20 April meeting in Saudi Arabia.
At the gathering in the Saudi city of Jeddah, Opec and Russia will focus on ways of prolonging their cooperation, and may discuss new inventory targets that extend their output cuts beyond this year as they aim to eliminate a glut. The meeting will play out against a backdrop of falling stockpiles and geopolitical tensions that have lifted prices, which in turn risk encouraging more US supply.
“Prices rose as investors focused more on the drop in US inventories” than the continued gains in production, Satoru Yoshida, a commodity analyst at Rakuten Securities Inc., said by phone from Tokyo. “If there is no indication at the Opec meeting that they will continue to cut production beyond 2018, that could drag down crude prices.”
West Texas Intermediate for May delivery climbed as much as 48 cents to $68.95 a barrel on the New York Mercantile Exchange, and traded at $68.87 at 1.33pm in Singapore. The contract climbed $1.95 to $68.47 on Wednesday. Total volume traded was little changed from the 100-day average.
Brent for June settlement added 47 cents to $73.95 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.07 premium to June WTI.
Futures for September delivery climbed 2.4% to 440.1 yuan a barrel on the Shanghai International Energy Exchange. The contract rose 0.5% to close at 429.7 yuan on Wednesday. Open interest in the contract rose to 7,314 lots in the previous session, the highest since its debut last month.
In the US, total inventories of crude and refined products, excluding strategic petroleum reserves, fell by 10.6 million barrels last week, the lowest level since March 2015, according to Energy Information Administration data. American crude stockpiles slid by about 1 million barrels, versus forecasts for a 650,000-barrel gain.
The EIA data also had another surprise. US gasoline demand surged to a record high of 9.9 million barrels a day before the summer driving season when consumption typically peaks. Stockpiles of gasoline fell by almost 3 million barrels, compared with a 450,000-barrel increase expected in a Bloomberg survey. Bloomberg