Oil Rises on Signs of U.S. Supply Drop, OPEC’s Optimism
(Bloomberg) -- Oil rose for a second day after an industry report pointed to a drop in U.S. inventories, and OPEC’s top official talked about the potential for a “sharp” slowdown in American shale output next year.
Futures added 1% in New York. Data published on Tuesday by the American Petroleum Institute, an industry body, signaled that U.S. crude stockpiles fell by 541,000 barrels last week, with official government figures coming later on Thursday. OPEC Secretary-General Mohammad Barkindo said there will likely be downward revisions to U.S. shale output going into 2020, though the latest monthly report from the group kept its outlook unchanged.
“Today, the market will focus on the release of official U.S. oil statistics by the Energy Information Administration,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “As usual, the mood ahead of the EIA release is being set by the preliminary numbers released by the API the day before.”
Barkindo’s prediction comes after major American shale producers including Pioneer Natural Resources Co. warned that the shale boom is ending, although the EIA increased its production forecast for next year on Wednesday. Yet OPEC’s monthly report showed markets remain on track for a surplus of about 645,000 barrels a day in the first half of next year if the group doesn’t cut production further.
West Texas Intermediate for December delivery rose 56 cents to $57.68 a barrel on the New York Mercantile Exchange as of 9:06 a.m. local time. It settled 32 cents higher at $57.12 on Wednesday.
Brent for January rose 69 cents, or 1.1%, to $63.06 a barrel on the London-based ICE Futures Europe Exchange after advancing 0.5% on Wednesday. The global benchmark crude traded at a $5.30 premium to WTI for the same month.
The drop in crude inventories reported by the API compares with expectations in a Bloomberg survey ahead of the EIA data for an increase of 1.5 million barrels.
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