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[MELBOURNE] Oil climbed for a third day amid signs that supply growth at the biggest storage hub for crude in the US may be slowing at a time when demand is improving.
Futures advanced as much as 0.7 per cent in New York. Stockpiles at Cushing, Oklahoma, the delivery point for West Texas Intermediate, expanded by 536,000 barrels through Feb 27, according to the Energy Information Administration. Prior to that, supplies at the hub had grown by more than 1 million barrels each week this year.
US crude inventories deepened a global surplus that drove prices almost 50 per cent lower in 2014. Cushing supplies rose to 49.2 million barrels, the highest level since June 2013. Prices will continue to stabilize as recovering demand helps the global market to rebalance, Saudi Arabia's Oil Minister Ali Al-Naimi reiterated.
"We may be getting the first inklings that the market is starting to equalize - the demand-supply gap starting to close a bit," David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone. "With the Cushing number down, that would certainly help but the size of total inventories are going to keep the price in check." WTI for April delivery gained as much as 37 US cents to US$51.90 a barrel in electronic trading on the New York Mercantile Exchange and was at US$51.72 at 1:38 pm Singapore time. The contract rose US$1.01 to US$51.53 on Wednesday. The volume of all futures traded was about 9.5 per cent below the 100-day average.
Brent for April settlement was 4 US cents higher at US$60.59 a barrel on the London-based ICE Futures Europe exchange. It fell 47 US cents to US$60.55 a barrel on Wednesday. The European benchmark crude was at a premium of US$8.89 to WTI.
US crude stockpiles expanded by 10.3 million barrels last week to 444.4 million, the EIA said Wednesday. That's the most in weekly data compiled by the Energy Department's statistical arm going back to August 1982. Analysts surveyed by Bloomberg News had predicted a gain of 3.95 million barrels.
Production rose by 39,000 barrels a day to 9.32 million a day, the highest level in weekly data from the EIA since January 1983. Output has increased even as drillers idled 589 rigs the past 12 weeks and companies from BP Plc to Royal Dutch Shell Plc reduced spending amid record inventories.
"Demand is gradually rising, global economic growth seems more robust and the oil price is stabilizing," Saudi's Al-Naimi said in a speech in Berlin Wednesday, repeating a similar comment made Feb. 25, when he said that oil demand is growing and the market has turned "calm." Saudi Arabia is the biggest producer in the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world's oil. The group pumped 30.6 million barrels a day in February, the ninth straight month that its collective quota of 30 million barrels a day was exceeded.
The world's biggest oil exporter will only cut output if customers refuse to buy its crude, which is unlikely because Saudi supply is the world's most reliable, Al-Naimi said. Non-OPEC producers must share responsibility for tackling the current oil surplus, he said.