Oil Pops as Industry Report Shows Surprise U.S. Stockpile Draw
(Bloomberg) -- Oil edged higher after an industry report showed a surprise decline in U.S. crude stockpiles.
Futures rose from the settlement after the industry-funded American Petroleum Institute was said to report U.S. crude stockpiles decreased 4.2 million barrels last week. A draw would be the first since early January if Energy Information Administration data confirms it on Wednesday. Analysts surveyed by Bloomberg were expecting a 3 million barrel increase.
A draw would likely be due to lower Venezuelan imports and higher U.S. crude exports, according to James Williams, president of London, Arkansas-based energy researcher WTRG Economics.
Earlier in the session, oil fluctuated before closing up less than 0.1 percent after Monday’s tumble. U.S. President Donald Trump tweeted Monday that oil prices are too high and called on the Organization of Petroleum Exporting Countries to “relax and take it easy.” Meanwhile, the market remains focused on the trade talks between the U.S. and China.
“The market is now looking for its next driver,” said Gene McGillian, manager of market research at Tradition Energy. “A lot of it is going to depend on what seems to come out of these trade talks. If we don’t get any kind of agreement or it looks as if the ratcheting up of tariffs is going to go forward even though the president is going to delay it for a while, I wouldn’t be too surprised to see concerns about slowing demand growth resurface.”
Oil’s gain of more than 20 percent this year has been propelled by output reductions by OPEC and its allies, led largely by Saudi Arabia. Optimism over a potential trade deal between the U.S. and China as well as sanctions on Iran and Venezuela have also helped crude to rally.
Russia reduced its oil production by almost 140,000 to 150,000 barrels a day from December, consistent with its commitment to the OPEC+ deal, Energy Minister Alexander Novak said.
“OPEC didn’t listen to Trump back in December because they knew they needed to cut,” said Michael Loewen, a commodities strategist at Scotiabank in Toronto. “Trump’s tweets and his influence in the financial markets is quite apparent, but investors are starting to question whether or not they are relevant anymore.”
West Texas Intermediate for April delivery traded at $55.93 a barrel at 4:34 p.m. after settling at $55.50 a barrel on the New York Mercantile Exchange. The contract dropped 3.1 percent to $55.48 on Monday, the biggest decline since Jan. 28.
Brent for April settlement rose 45 cents to end the session at $65.21 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.71 premium over WTI.
The API also reported gasoline stockpiles fell 3.8 million barrels, distillates rose 400,000 barrels and Cushing, Oklahoma, supplies increased 2 million barrels last week.
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