Oil Surges Most in a Month as U.S. Sees Steep Drop in Imports

(Bloomberg) -- Oil prices jumped by the most in almost a month after a plunge in U.S. stockpiles showed OPEC and its allies tightening global supplies despite President Donald Trump’s protests.

Futures in New York rose 2.6 percent Wednesday after the Energy Information Administration said oil imports to the U.S. hit a two-decade low, with shipments from Saudi Arabia the lowest in weekly data since 2010. Overall, domestic oil inventories slid by 8.65 million barrels last week, twice the decline foreseen in a bullish industry report a day earlier.

Prices have rallied about 25 percent this year as the Organization of the Petroleum Exporting Countries and Russia orchestrated production cuts and Venezuela’s political crisis restricted supplies further. The Saudis on Wednesday signaled that they’ll continue the strategy, two days after Trump posted a tweet urging the group to step off the accelerator.

The U.S. inventory data offered “one of the most bullish weekly reports that we’ve seen in some time," said Brian Kessens, who helps manage $16 billion in energy assets at Tortoise in Leawood, Kansas. “We thought the Trump tweet would put some pressure on OPEC+ to keep supply higher but it seems like it’s falling on deaf ears."

West Texas Intermediate for April delivery recorded its biggest gain on the New York Mercantile Exchange since Feb. 1, closing $1.44 higher at $56.94 a barrel.

Brent for April settlement rose $1.18 cents to $66.39 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a $9.45 premium over WTI.

The U.S. imported 5.92 million barrels of crude last week, the lowest level since 1996, the EIA said. The decline in foreign shipments and increase in demand for refined products overshadowed American shale oil production that hit yet another weekly record.

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Bad weather in the Gulf of Mexico may have helped temporarily depress imports, and the report included an unusual decline in Canadian exports to the U.S. Still, the overall drop in supplies encouraged traders, especially given that refinery maintenance usually reduces demand for crude this time of year.

“No matter how you cut it, a draw of 8 million during turnaround season is a gigantic number," said Bob Yawger, director of futures at Mizuho Securities USA.

Russia will achieve its reduction target of 228,000 barrels a day from October levels by the end of March or start of April, Energy Minister Alexander Novak said in an interview Tuesday. His comments came after data from the Energy Ministry’s CDU-TEK unit seen by Bloomberg showed smaller reductions than Novak had pledged.

--With assistance from Tsuyoshi Inajima, Saket Sundria, Grant Smith and Javier Blas.

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Christine Buurma, Joe Carroll

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