Oil trades near $57 as U.S. crude stockpiles seen extending drop

By Grant Smith on 12/19/2017

LONDON (Bloomberg) -- Oil traded near $57/bbl for a third day before data expected to show that surplus crude inventories in the U.S. continued to diminish as global markets rebalance.

Futures rose 0.7% in New York after slipping 0.2% on Monday. Inventories probably lost 3 MMbbl last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. Nigerian oil workers suspended strike action and agreed to continue talks next month, while output from a Libyan field returned to normal after a power outage.

Oil has rallied the past three months as the Organization of Petroleum Exporting Countries and its allies reduce supply to drain a global glut. The unprecedented cooperation among producers, which has now been extended until the end of 2018, has crude prices on their way to a second annual advance.

“As long as the agreement between Saudi Arabia and Russia holds to curb production, oil prices will stay in the region of $60,” Paolo Scaroni, vice-chairman of NM Rothschild & Sons and former chief executive officer of Eni SpA, said in a Bloomberg television interview on Tuesday. “Oil prices are also OK for the shale-oil producers, which need a price of around $60 if they want to make some money. In total, the situation is stable.”

West Texas Intermediate for January delivery, which expires Tuesday, added 37 cents to $57.53/bbl on the New York Mercantile Exchange. Total volume traded was about 52% below the 100-day average. The more-active February futures rose 34 cents to $57.56 at 12:58 p.m. in London.

Brent for February settlement rose 30 cents to $63.71/bbl on the London-based ICE Futures Europe exchange after rising 0.3% on Monday. The global benchmark traded at a premium of $6.13 to February WTI.

U.S. crude stockpiles at Cushing, Okla., the delivery point for WTI and the nation’s biggest oil-storage hub, probably fell by 2.2 MMbbl last week, according to a forecast compiled by Bloomberg. That would be a sixth weekly drop, the longest run since July, according to EIA data.

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