Oil holds around $52 before US inventory report
LONDON: Oil held around $52 a barrel on Wednesday as an industry report showing a large drop in US crude stocks countered doubts that compliance with Opec-led supply cuts will increase.
US crude inventories last week fell by 7.8 million barrels, more than expected, but gasoline inventories rose unexpectedly, data from the American Petroleum Institute (API) showed on Tuesday ahead of Wednesday’s official numbers.
Brent crude, the global benchmark, was unchanged at $52.14 at 0828 GMT, after two days of decline. US West Texas Intermediate (WTI) crude added 4 cents at $49.21. “Oil is stuck in a range of $45-$50 for WTI and a bit more for Brent for now,” said Bob Takai, President at Sumitomo Corp Global Research in Tokyo.
The focus later on Wednesday will be on the US government supply report at 1430 GMT to see whether it confirms the API’s figures. Analysts expect crude stocks to have fallen by 2.7 million barrels and gasoline by 1.5 million barrels.
Should US crude stocks have declined, it would be for the sixth straight week — an indication that an Opec-led effort to wipe out a three-year, price-sapping supply glut is working.
The Organization of the Petroleum Exporting Countries, Russia and other producers are cutting output by about 1.8 million barrels per day (bpd) from January 1 until March 2018.
The deal has supported prices but an output recovery in Libya and Nigeria, Opec members exempt from the cut, has complicated the effort. US shale oil drillers have also ramped up production.
Opec officials met on Monday and Tuesday in Abu Dhabi in an effort to boost producers’ adherence to the supply cuts, which has been high on average despite relatively low compliance by Iraq and the United Arab Emirates.