Crude climbs to two-year high as stockpiles fall before OPEC meets

By Ben Sharples and Grant Smith on 11/22/2017

HONG KONG and LONDON (Bloomberg) -- Oil climbed to a two-year high as U.S. industry data showed crude stockpiles resumed declines and investors awaited a decision by OPEC on extending output cuts.

January futures rose as much as 2.2% in New York, the highest since mid-2015. U.S. inventories fell by 6.36 MMbbl last week, the API was said to report. That’s more than forecast in a Bloomberg survey, which shows a drop of 2.2 MMbbl ahead of government data later Wednesday.

Oil has risen this month on speculation that OPEC and its partners will decide to prolong supply cuts beyond March when they meet in Vienna next week. Saudi Arabia, OPEC’s de facto leader, has been reducing exports as well as production, with shipments in September dropping to the lowest since March 2011, according to official data submitted to the JODI global database.

“It does appear the only way is up for oil,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “A lot of traders are speculating about the potential outcome of the OPEC meeting. Expectations are high and that could lead to disappointment if OPEC and its partners don’t deliver, but it doesn’t seem many are prepared to take the risk of that happening.”

WTI for January delivery gained as much as $1.22 to $58.05/bbl on the NYME, and was at $57.81 in London. The contract advanced $0.41 to $56.83 on Tuesday.

Brent for January settlement increased $0.57, or 0.9%, to $63.14/bbl on the ICE Futures Europe exchange after climbing 0.6% on Tuesday. The global benchmark traded at a premium of $5.35 to WTI.

U.S. crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest oil-storage hub, dropped by 1.8 MMbbl last week, the API said, according to people familiar with the data. Gasoline inventories expanded by 869,000 bbl, API data show.

Oil Market News

Andy Hall, the veteran crude trader who closed his hedge fund this year, will brief OPEC officials on the outlook for U.S. shale oil, according to a copy of the agenda seen by Bloomberg News. The front-month contract for WTI futures on the New York Mercantile Exchange just turned more expensive than the second-month contract. The market hasn’t settled in that structure, known as backwardation, since November 2014.

Related News ///


Comments ///


{{ error }}
{{ comment.comment.Name }} • {{ comment.timeAgo }}
{{ comment.comment.Text }}