Oil rises 2% with supplies expected to tighten

NEW YORK — Oil prices rose more than 2% on Wednesday as US crude inventories grew less than expected, supply disruptions continued in Libya and the Organization of the Petroleum Exporting Countries (OPEC)-led output cut by producing countries looked likely to be extended.

US crude futures surged to nearly a two-week high after the Energy Information Administration ( EIA) reported that crude inventories rose 867,000 barrels last week, nearly half the build expected, as refineries ramped up processing after seasonal maintenance and as imports dropped and exports rose.

And analysts expect further drops in coming weeks.

“Time is beginning to run out for further large crude inventory builds before the usual secondhalf of April start of seasonal crude draws,” Standard Chartered said in a note.

“We expect runs to increase by a further 1 million barrels per day ( bpd) until they reach a seasonal peak in July or August, provid- ing strong downward pressure on crude inventories.”

US refinery crude runs rose 425,000 bpd as utilization rates jumped 1.9 percentage points to 89.30% of capacity, the EIA data showed.

Brent crude futures settled $1.09, or 2.10%, higher at $52.42 a barrel after hitting a session high of $52.46, the highest since March 16.

US crude West Texas Intermediate ( WTI) futures ended up $1.14 cents, or 2.40%, at $49.51 a barrel after peaking at $49.54, the highest since March 16.

US gasoline futures surged as much as 2.40% to the highest in three weeks after EIA data showed a 3.7 million-barrel drop in gasoline stocks last week, nearly 2 million barrels more than forecast.

“WTI crude bulls are emboldened by the double whammy of another large increase in refinery utilization rates and a big jump in crude oil export levels,” said David Thompson, executive vice-president at Powerhouse, a commodities broker in Washington.

US crude exports nearly doubled last week to climb to over one million bpd, EIA data showed.

US crude exports surged 12% in 2016 to 520,000 bpd and China became the third- biggest overseas destination for US crude last year, according to EIA data, up from ninth in 2015.

Supporting prices was Tuesday’s declaration of force majeure by Libya’s National Oil Corp. after output from the western Libyan fields of Sharara and Wafa was blocked by armed protesters, cutting output by some 250,000 bpd.

UBS oil analyst Giovanni Staunovo said in a note he expects Brent to top $60 over three months before leveling off in six months to $60 and then falling to $57 a barrel in 12 months, spurred by rising US shale production and higher OPEC output. —