Oil rises ahead of U.S. inventory data
By Julia Simon
Brent crude was up 23 cents at $51.83 a barrel by 1:17 p.m. EST (1717 GMT), while U.S. crude futures rose 12 cents to $49.35 a barrel.
Analysts polled ahead of inventory reports from the industry group American Petroleum Institute (API) and the U.S. Department of Energy’s Energy Information Administration (EIA) estimated, on average, that U.S. crude stocks fell 1.6 million barrels last week, the third consecutive weekly draw.
The API data is due at 4:30 p.m. EDT.
Brent is down about 5 percent since early December, when the Organization of the Petroleum Exporting Countries and Russia agreed to cut output by 1.8 million barrels per day (bpd) in the first half of the year.
Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky said global crude loadings are at record levels.
“We still see that continue to tick higher,” Smith said. “Until we see the loadings drop, until we see the oil on the water falling, we are unlikely to see the market materially moving toward rebalancing.”
Russia said on Monday its oil output could climb to the highest rate in 30 years if OPEC and non-OPEC producers do not extend their supply reduction deal beyond June 30.
To reduce the supply overhang, JPMorgan said OPEC “will be forced to renew, and possibly deepen the agreement if they wish to keep prices much above $50 per barrel.”
But ClipperData’s Smith said there was a lot of posturing ahead of the May 25 meeting of OPEC and non-OPEC producers.
“We have a month before the meeting in Vienna,” he said, “Between now and then we’re going to get a lot of contrasting rhetoric.”
SEB commodities strategist Bjarne Schieldrop said the current climate will be uncertain until the May 25 meeting. “It doesn’t make sense to sell down to $45 ahead of that,” he said.
(Additional reporting by Amanda Cooper in London, Henning Gloystein in Singapore; Editing by Marguerita Choy and Edmund Blair)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)