Oil climbs as U.S. crude output slips
NEW YORK • Oil advanced on Wednesday after a government report showed that U.S. crude production dropped from the highest level in more than three decades.
Futures rose as much as 6% in New York. Output fell 36,000 barrels a day to 9.39 million last week, the first decline since January, according to the Energy Information Administration. That’s down from 9.42 mil- lion on March 20, the most in weekly estimates that started in January 1983.
Drillers cut the number of active rigs seeking oil in the U.S. last week to the fewest since March 2011. Prices dropped earlier Wednesday as Iran and world powers pressed ahead with talks to draft the outline of an agreement to end the 12-year standoff over the country’s nuclear program. Oil capped the longest run of quarterly declines since 2003 on Tuesday, amid speculation Iranian supplies will add to a global glut.
“There’s been a significant drop in the rig count and it’s starting to be reflected in the data,” Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC, who helps manage US$16.9 billion, said by phone. “There’s no doubt that the pace of U.S. oil production is going to slow.”
West Texas Intermediate for May delivery rose US$2.49, or 5.2%, to settle at US$50.09 on the New York Mercantile Exchange.
Crude stockpiles gained 4.77 million barrels to 471.4 million in the week ended March 27, the most in records compiled since August 1982. A gain of 4.2 million barrels was the median of eight analyst estimates in a Bloomberg survey.
“The market really wants to believe this is the start of a sustained drop in production,” Rob Haworth, a senior investment strategist at U.S. Bank Wealth Management, which oversees about US$126 billion of assets, said by phone. “I don’t see it, though, and think we’ll continue to see supplies build.”
Inventories at Cushing, Okla., the delivery point for WTI traded in New York, climbed 2.63 million barrels to a record 58.9 million.