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[NEW YORK] Oil rose in New York after a government report showed that crude stockpiles at the biggest US storage hub dropped the most since October.
Futures climbed 0.6 per cent. Supplies at Cushing, Oklahoma, fell by 1.27 million barrels last week, the Energy Information Administration said. The agency reported that nationwide stockpiles rose 2.35 million barrels, while the industry-funded American Petroleum Institute said there was a 5.04 million-barrel decrease on Wednesday.
Opec output cuts won't necessarily trigger a "bonanza" of US shale supply, the International Energy Agency said.
Oil has held above US$50 a barrel since Opec and nations including Russia agreed late last year to trim supply by about 1.8 million barrels a day to reduce bloated global inventories. While producers from Saudi Arabia to Iraq have signaled they're implementing the reductions, the IEA predicted a rebound in US shale output as prices rise.
"We would be lower if not for the significant drop at Cushing," Thomas Finlon, director of Energy Analytics Group in Wellington, Florida, said by telephone. "Imports dropped from very high levels, which explains why crude supplies increased by so much."
West Texas Intermediate for February delivery, which expires Friday, rose 29 cents to US$51.37 a barrel on the New York Mercantile Exchange. Total volume traded was 17 per cent below the 100-day average. The more-active March contract advanced 23 US cents to US$52.12.
Brent for March settlement advanced 24 cents to US$54.16 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a US$2.04 premium to March WTI.
"The oil price has support at US$50," Matt Sallee, who helps manage US$16.3 billion in oil-related assets at Tortoise Capital Advisors in Leawood, Kansas, said by telephone. "We should trade between US$50 and US$60 this year. We will approach US$60 in the later part of the year and move higher as we go into 2018."
Crude stockpiles at Cushing, which is the delivery point for WTI, dropped to 65.7 million barrels in the week ended Jan 13, according to the EIA. Nationwide crude inventories rose for a third week, climbing to 485.5 million.
Refineries processed 16.5 million barrels a day of crude last week, down 639,000 barrels from the prior week's record pace of 17.11 million, the report showed. Refineries operated at 90.7 per cent of capacity, down 2.9 per centage point from the prior week, the biggest decline in three months.
Gasoline stockpiles rose 5.95 million barrels to 246.4 million, the highest since March. Inventories of distillate fuel, a category that includes diesel and heating oil, slipped 986,000 to 169.1 million.
As supply curbs by Opec and Russia drain a global glut, rising prices will spur drilling by US shale explorers that are more efficient after the two-year downturn, according to the IEA. The agency had previously seen American production stagnating in 2017.
Opec and 11 other producers are making "tremendous efforts" to cut output, according to Secretary-General Mohammad Barkindo.
The heads of oil traders Gunvor Group and Mercuria Energy Group predict crude prices will range between US$50 and US$60 a barrel in 2017.
WTI will average US$60 a barrel in 2018, according to the median of 30 analyst estimates compiled by Bloomberg, just US$5 higher than what they were forecasting a year ago for 2017.