Oil rebounds on US stockpile drop report as Saudis lift output
HONG KONG: Oil rebounded above US$48 a barrel as a reported decline in US crude stockpiles countered a boost in output from Saudi Arabia.
Futures advanced as much as 2.4% in New York after slumping almost 11% the previous seven sessions.
US inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report. Government data is forecast to show stockpiles rose for a 10th week. Saudi Arabia’s production climbed back above 10 million barrels a day in February, according to an Opec report on Tuesday.
Oil last week broke below US$50 a barrel for the first time since December as rising US supply has swamped the impact of supply reductions from members of the Organisation of Petroleum Exporting Countries (Opec) and 11 other nations that started Jan 1.
While Saudi Arabia increased output by 263,300 barrels a day last month, production is still below a ceiling set under the cut deal.
“We’ve had a severe decline in prices so it’s not a surprise to see a healthy bounce,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“Concerns are that agile US producers are replacing the Opec production cuts. The official crude inventory numbers will be important.” West Texas Intermediate for April delivery rose as much as US$1.15 to US$48.87 a barrel on the New York Mercantile Exchange and was at US$48.49 in London.
Total volume traded was about 10% above the 100-day average. Prices fell 68 US cents to US$47.72 Tuesday, the lowest close since Nov 29.
Brent for May settlement rose as much as 84 US cents, or 1.7%, to US$51.76 a barrel on the London-based ICE Futures Europe exchange. Prices lost 0.8% to US$50.92 on Tuesday. The global benchmark crude traded at a premium of US$2.56 to May WTI.
US crude inventories probably increased by 3.13 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Stockpiles have climbed to 528.4 million barrels, the highest level in weekly EIA data compiled since 1982.