Oil trades near one-week high as stockpile gains slow down
LONDON (Bloomberg) -- Oil in New York traded near a one-week high as improving sentiment in equities spilled over into crude and American stockpiles increased slower than forecast.
Futures slipped 0.2% after gaining 2.4% on Wednesday. Global equities recovered from the recent risk-asset rout, while a weaker dollar burnished the appeal of commodities priced in the U.S. currency. American stockpiles grew 1.84 MMbbl last week, the slowest expansion in three weeks, according to the Energy Information Administration.
“With the weak dollar and the rallying stock markets it is no surprise oil finished the day significantly higher” on Wednesday, said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
Oil had been struggling to recover to levels seen before last week’s plunge as investors are wary that OPEC’s strategy of curbing output could backfire and lead to a resurgence in U.S. shale production. While stockpiles in developed nations have shrunk to the lowest since 2014, supplies still remain about 52 MMbbl above the five-year average, showing how far the Organization of Petroleum Exporting Countries has to go to reach its target level.
West Texas Intermediate for March delivery fell 10 cents to $60.50/bbl on the New York Mercantile Exchange as of 12:57 p.m. in London. Prices are up 2.2% this week, recovering some of last week’s 9.6% decline. Total volume traded was about 13% above the 100-day average.
U.S. barrels
Brent for April settlement fell 42 cents to $63.94 on the London-based ICE Futures Europe exchange and traded at a $3.55 premium to WTI for the same month.
The increase in U.S. inventories pushed total oil held in tanks to 422 MMbbl, the highest this year, according to EIA data Wednesday. The build of 1.84 MMbbl was less than the 3.1 MMbbl gain forecast in a Bloomberg survey.
Stored oil in Cushing, Oklahoma, the delivery point for WTI, fell to the lowest level in three years, while gasoline stockpiles rose to the highest since March.
The MSCI World Index is up about 3.2% this week as benchmark equity indexes from the U.S. to the U.K. advance.
Other oil-market news. OPEC will discuss with Russia in April a new way to measure oil inventories as producers meet to review their supply-cuts agreement that expires at the end of 2018, Saudi Arabia Energy Minister Khalid Al-Falih said. He added that OPEC and Russia should persevere with production cuts even if it results in a small supply shortage. Non-OPEC producers’ compliance slipped to the lowest level since July last month while OPEC’s reached a record, according to Bloomberg calculations from OPEC’s secondary-source estimates. The Bloomberg Dollar Spot Index fell 0.2% and is down 1.6% this week.
