Oil breaches $50 for first time in more than a month amid demand resurgence

By Jessica Summers on 9/14/2017

NEW YORK (Bloomberg) -- Oil topped $50/bbl for the first time in more than a month amid heightened optimism that a demand resurgence is in the offing.

Futures rose as much as 1.7% in New York, extending the longest upswing since July. Two of the most influential organizations in world oil markets -- the International Energy Agency and OPEC -- nudged their demand forecasts higher, signaling continued erosion of a global glut that has weighed on prices.

Oil demand for 2017 will expand by the most in two years, the Paris-based IEA said on Wednesday. That followed OPEC’s increase of its estimate for how much crude buyers will seek from the cartel next year, driven by rising consumption in Europe and China. In the U.S., hurricane-driven refinery outages spurred fuel distributors to pull a record amount of gasoline from storage tanks to cope with shortages, government data showed.

The IEA report “was taken as confirmation of the prevalent supply-tightening narrative, that that oil surplus is slowly disappearing,” said Norbert Ruecker, head of commodity research at Julius Baer Group Ltd.

Oil had lingered below $50/bbl since the second week of August as efforts by the Organization of Petroleum Exporting Countries and partners including Russia to whittle the supply surplus floundered. This week, OPEC and its allies were said to be discussing extending supply cuts past the end of March, and compliance with the supply limits rose to 96% in August, OPEC data from so-called secondary sources showed.

West Texas Intermediate for October delivery climbed $1.13 to $50.43/bbl at 10:41 a.m. on the New York Mercantile Exchange after earlier reaching $50.50. Total volume traded was about 36% above the 100-day average. WTI rose above its 200-day moving average for the first time since early August.

Brent for November settlement increased 44 cents to $55.60/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.22 to November WTI.

An Energy Information Administration report Wednesday showed U.S. gasoline stockpiles slid to 218.3 MMbbl last week. At the same time, crude output rose by 572,000 bpd to 9.35 MMbpd, while stockpiles expanded by the most since March, the data showed.

The breakthrough at the $50 level met with a bit of resistance, Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “The market turned its back on what was, at the end of the day, other than the gasoline segment, a pretty bearish report on the weekly storage situation.”

Related News ///


Comments ///


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