Oil tops $50 as Kuwait says OPEC in talks for meeting consensus
NEW YORK (Bloomberg) -- Crude rose to a three-week high after Kuwaiti comments bolstered optimism that OPEC and its partners will extended output curbs.
Futures in New York climbed 1.7%. Kuwait and other countries support prolonging production cuts that are scheduled to expire in June, the Persian Gulf emirate’s Oil Minister Issam Almarzooq told state-run news agency KUNA. Prices rose Wednesday after U.S. government data showed that gasoline inventories dropped more than expected, while refineries boosted the amount of crude they processed by the most in almost three years.
While U.S. crude supplies rose to a record last week, they increased by less than they were expected to, signaling that more oil is being pulled out of storage. That optimism and the disruption in Libyan output has helped drive prices for three days, their longest stretch of gains in more than a month. They slid last week to the lowest since November as American supply gains countered output cuts by other producers.
"It looks like they will potentially extend the cuts," Mark Watkins, the Park City, Utah-based regional investment manager for the Private Client Group at U.S. Bank, which oversees $136 billion in assets, said by telephone. "Even though there’s been skepticism about OPEC and its partners, the signs are pointing toward their success."
West Texas Intermediate for May delivery advanced 84 cents to settle at $50.35 a barrel on the New York Mercantile Exchange. It was the highest close since March 7.
Refinery demand
Brent for May settlement, which expires Friday, rose 54 cents, or 1%, to $52.96/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a $2.61 premium to WTI.
U.S. gasoline inventories dropped by 3.75 MMbbl last week, according to an Energy Information Administration report on Wednesday. They were projected to fall by 2 MMbbl. Refineries processed 16.2 MMbpd of crude last week, up 425,000 bbl from the prior week, according to the EIA. It was the biggest weekly increase since June 2014.
Nationwide crude stockpiles rose by 867,000 bbl to all-time high of 534 million. Analysts surveyed by Bloomberg projected 2-MMbbl gain. Oil output climbed further to above 9.1 MMbpd.
"Traders are responding to speculation about the possible extension of the output cuts," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass., said by telephone. "This is more important than inventory levels at the moment. We’ll have to start seeing inventories decline before long or prices will come back under pressure."
