Oil price climbed the most in a week after an industry report signaled a surprise decline in U.S. oil inventories, and Russia confirmed it’s reducing production in line with an agreement by OPEC and its allies.
Futures in New York rose as much as 1.1 percent as trading resumed after a three-hour halt due to a problem at CME Group Inc. Nationwide stockpiles fell by 4.2 million barrels last week, the American Petroleum Institute was said to report, compared with a forecast for a 3 million barrel increase in a Bloomberg survey. Russia cut output by almost 140,000 to 150,000 barrels a day from the December level, said Energy Minister Alexander Novak.
Crude has rallied around 23 percent this year as Saudi Arabia led an effort by the Organization of the Petroleum Exporting Countries and its allies to cut production and rebalance the market. Venezuela’s worsening political crisis and signs the U.S. and China are getting close to a trade deal have also supported prices. While President Donald Trump’s call for cheaper oil spurred a sharp drop on Monday, the impact appears to have been temporary.
“I think the market has disregarded the comments from the U.S. president and is more focused on ongoing supply side issues,” said Daniel Hynes, a senior commodity strategist at ANZ Banking Group Ltd. in Sydney. The comments by the Russian energy minister also eased concerns over the country’s commitment to reducing production, he said.
West Texas Intermediate for April delivery was 44 cents higher at $55.94 a barrel on the New York Mercantile Exchange at 3:29 p.m. in Singapore. The contract closed little changed at $55.50 on Tuesday.
Brent for April settlement rose 34 cents to $65.55 a barrel on the London-based ICE Futures Europe exchange. The contract increased 45 cents to settle at $65.21 on Tuesday. The global benchmark crude was at a $9.64 premium over WTI.
Russia will achieve the reduction target of 228,000 barrels a day from the October baseline by the end of March or start of April, making it fully complaint with its commitment to the OPEC+ deal, Novak said in an interview with Gazeta.Ru. His comments came after data from the Energy Ministry’s CDU-TEK unit seen by Bloomberg showed smaller reductions than Novak had pledged.
The API also reported gasoline stockpiles fell by 3.8 million barrels, distillates rose 400,000 barrels and Cushing, Oklahoma, supplies increased by 2 million barrels last week. Analysts in a Bloomberg survey forecast an increase of 1.8 million barrels at Cushing.
Even as U.S. supplies shrank, Saudi Arabian Energy Minister Khalid Al-Falih said inventories in the U.S. are “brimming,” and reducing that glut remains the main goal for OPEC. He said the kingdom plans to extend the production cuts into the second half of 2019, potentially pitting the group against Trump’s demand to keep prices down.source: Bloomberg