Oil in longest rally in three months
This comes amid signs of US stockpile drop
SEOUL: Oil extended gains above US$54 a barrel in the longest winning streak in three months as US industry data showed both crude and gasoline inventories declined last week.
Futures added as much as 1.1% in New York after rising 4.2% in the four sessions through Tuesday.
Crude stockpiles dropped by 5.09 million barrels, while gasoline supplies fell by 7.7 million last week, the American Petroleum Institute was said to report. US oil inventories probably decreased a fifth time in six weeks, according to a Bloomberg survey before government data yesterday.
Global benchmark Brent crude topped US$60 a barrel last month for the first time sinceJuly2015,whileWestTexasIntermediate, the US marker, is set for the highest close in two years as Saudi Arabia and Russia signaled support for extending supply cuts well into 2018.
The market was also buoyed by conflict between the Iraqi central government and Kurdish forces that threatened crude production from northern fields in the Opec nation.
“The pace is slow but the oil market’s heading toward rebalancing,” Seo Taejong, a Seoul-based analyst at Korea Investment & Securities Co, said by phone. “Surging US crude exports are currently dragging the nation’s stockpiles, but this can be a double-edged sword because while falling inventories are good for prices, it can also mean US production can be boosted.”
WTI crude for December delivery traded at US$54.93 on the New York Mercantile Exchange at 3:59 pm in Singapore, up 55 cents. If the current session ends at that level, it would be the highest close for front-month prices since July 2015. Total volume traded was about 43% below the 100-day average. Prices climbed 5.2% last month.
Brent for January settlement rose 35 cents, or 0.6%, to US$61.29 a barrel on the Londonbased ICE Futures Europe exchange. The December contract expired on Tuesday, up 47 cents, or 0.8%, at US$61.37. The benchmark traded at a premium of US$6.18 to January WTI. An Energy Information Administration report Wednesday is forecast to show US crude inventories fell by 1.3 million barrels last week, according to the median estimate in a Bloomberg survey of analysts. Gasoline stockpiles probably dropped by 1.55 million barrels.
Daily exports of American crude climbed for the sixth time in seven weeks to 1.92 million barrels in the week ended Oct 20, accord- ing to EIA data.
Saudi Arabia will need oil to trade at US$70 a barrel next year to break even, the Washington-based International Monetary Fund said on Tuesday in its Regional Economic Outlook for the Middle East and Central Asia.
Goldman Sachs Group Inc has hired a slate of traders from rivals to turn around commodities business after it suffered the worst quarterly performance in the firm’s history as a public company.— Bloomberg