Shrinking U.S. Oil Supplies Keep Futures at Highest in 3 Years
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Nationwide supplies fell 4.95 million barrels last week: EIA
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Cushing crude inventories extend drop below five-year average
From being a source of concern, U.S. supplies have turned into a source of optimism for oil investors.
Futures in New York were holding gains near the highest close in more than three years, after rising 3.5 percent the previous three sessions. American inventories fell by 4.95 million barrels last week, the eighth consecutive drop, while crude stockpiles at Cushing, Oklahoma, the delivery point for West Texas Intermediate, extended a drop below the five-year average. Output shrank the most since October.
Oil is extending gains after a second yearly advance as the Organization of Petroleum Exporting Countries and its allies trim supply to reduce a global inventory overhang. While U.S. output slid last week, the EIA has forecast production will rise above 10 million barrels a day as soon as next month.
“Although U.S. stockpiles fell, tight-oil supply growth is still strong and we are heading into seasonally weaker demand after the winter,” Victor Shum, a Singapore-based vice president at industry consultant IHS Energy, said in an interview. “We may see inventories start to climb again.”
WTI for February delivery was at $63.54 a barrel on the New York Mercantile Exchange, down 3 cents, at 2:34 p.m. in Hong Kong. Total volume traded was about 11 percent above the 100-day average. Prices gained 1 percent to $63.57 on Wednesday, the highest close since December 2014.
See also: More Than Just OPEC Underpins 49% Surge in Crude Oil Pricing
Brent for March settlement lost 4 cents to $69.16 a barrel on the London-based ICE Futures Europe exchange after adding 0.6 percent to close on Wednesday at the highest level since December 2014. The global benchmark crude traded at a premium of $5.79 to March WTI.
Bloomberg’s Ramy Inocencio goes over three Bloomberg terminal charts to discuss oil prices.
U.S. crude stockpiles fell to 419.5 million barrels last week, the lowest level since August 2015, according to EIA data Wednesday. The eight weeks of declines is the longest run during America’s winter in a decade. Oil production slid by 290,000 barrels a day to 9.49 million a day.
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