Oil Gains Hold as Industry Said to Report Surprise Storage Drop
(Bloomberg) -- Oil clung to its gains following an industry report that U.S. stockpiles unexpectedly shrank.
Futures in New York held close to the settlement Tuesday after the American Petroleum Institute was said to report crude inventories declined 3.28 million barrels last week. But supplies were said to have surged at the key distribution hub of Cushing, Oklahoma. During the session, oil recovered some of Monday’s losses along with equity markets.
“In terms of the overall crude, gasoline and distillates, it’s fairly neutral,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said. But, “with a Cushing gain of 4 million barrels, if that turns out to be the number, it’s going to be negative for crude futures.”
Helping support prices this year are supply cuts led by OPEC. Russian Energy Minister Alexander Novak said his nation is ready to discuss long-term cooperation with the group at a ministerial meeting this month. At the same time, the cartel’s output in March dropped to the lowest in a year, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.
A risk-on tone gripped U.S. markets Tuesday, with equities pushing to session highs on a Bloomberg report that the Trump administration is not actively seeking to act on the president’s perceived problems with Amazon.com Inc.
“What we are seeing is a little bit of increase in risk appetite,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “We had a big selloff for no apparent reason other than the fact that equities were getting smashed. Now, there is a bit of a relief rally.”
West Texas Intermediate for May delivery traded at $63.57 a barrel at 4:44 p.m. after settling at $63.51 a barrel on the New York Mercantile Exchange. Total volume traded was about 28 percent below the 100-day average.
Brent for June settlement climbed 48 cents to end the session at $68.12 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $4.66 premium to June WTI.
Inventories at Cushing rose 4.06 million barrels, the API report was said to show. Gasoline supplies were said to have increased 1.12 million barrels.
U.S. crude inventories probably expanded by 2 million barrels last week, according to a Bloomberg survey ahead of an Energy Information Administration report on Wednesday. Inventories held at Cushing likely rose by 2.4 million barrels, according to a forecast compiled by Bloomberg.
Gasoline futures rose 0.4 percent to settle at $1.9741 a gallon. Saudi Arabian-led forces foiled an attack on an oil tanker by what were described as Iranian-backed Houthis, according to the Saudi Press Agency. Halliburton Co. is handing millions in added compensation to top executives for guarantees they won’t compete against the company in the near future.