A worker collects a sample of crude oil at a multiple well platform, operated by Rosneft PJSC, in the Samotlor oilfield near Nizhnevartovsk, Russia (Photographer: Andrey Rudakov/Bloomberg)

Oil Gains as Industry Report Shows Unexpected Cut in U.S. Supply

(Bloomberg) -- Crude prices regained momentum after an oil-industry report showed an unexpected drop in U.S. fuel supplies.

Futures in New York climbed almost 1 percent from the close in after-hours trading on Tuesday. The move came after the American Petroleum Institute was said to report domestic crude inventories declined 2.58 million barrels last week, even as analysts had predicted an increase. A 5.85 million-barrel drop in gasoline stores would be the deepest in a year, if confirmed Wednesday by official government figures.

“These are clearly bullish numbers, and if reinforced it will be more bullish," said James Williams, president at WTRG Economics in London, Arkansas.

Oil Gains as Industry Report Shows Unexpected Cut in U.S. Supply

West Texas Intermediate for April delivery traded as high as $57.28 a barrel in after-hours trading on the New York Mercantile Exchange, following a close at $56.87.

The U.S. Energy Information Administration is due to report its official numbers on domestic supply and demand on Wednesday. The median forecast in a Bloomberg survey was for a 3 million-barrel increase in crude stockpiles.

Oil has rallied more than 25 percent so far this year in New York as the Organization of Petroleum Exporting Countries and its allies show commitment to their deal to reduce production and as output in Venezuela declines. Gains have been limited though as U.S. crude production remains at record-high levels.

While prices surged to a one-week high earlier on Tuesday, they spent the rest of the session retreating ahead of a slew of anxiety-provoking headlines. The U.K. fumbled to find a Brexit strategy, countries around the world grounded Boeing Co.’s 737 Max airline and the U.S. Energy Information Administration trimmed its forecast for global petroleum demand.

“It’s a lot of little things, overhanging risks that people are worried about," said Mark Waggoner, president of Oregon brokerage Excel Futures Inc.

Investors are also watching developments at CERAWeek by IHS Markit, the annual gathering in Houston of some of the energy industry’s biggest names. OPEC Secretary-General Mohammad Barkindo said the group wasn’t worried about ballooning U.S. shale production. “What we are concerned about is orderly growth, orderly expansion, to meet current and future demand,” he said.

Other oil-market news:
  • Gasoline futures closed down 0.6 percent at $1.8155 a gallon. 
  • UBS lowered its price forecasts on crude for 2019 and for 2020 to reflect higher U.S. crude production and a lower global demand forecast for 2019.
  • Secretary of State Michael Pompeo said the U.S. will pull all remaining personnel from its embassy in Venezuela’s capital, adding that the presence of diplomatic staff “has become a constraint on U.S. policy.”

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