You are here

Oil holds near seven-month high as US stockpiles seen falling

oil180516.jpg
Oil held gains near the highest close in seven months as US industry data showed crude stockpiles declined, trimming a glut.

[HONG KONG] Oil held gains near the highest close in seven months as US industry data showed crude stockpiles declined, trimming a glut.

Futures climbed as much as 0.6 per cent in New York after rising 4.5 per cent the previous two sessions. Inventories fell by 1.14 million barrels last week, the American Petroleum Institute was said to report.

Government data Wednesday is forecast to show supplies slid for a second week. Wildfires in Canada have shifted back toward oil-sands operations, forcing Suncor Energy Inc to evacuate three sites it was restarting.

Oil has surged more than 80 per cent since slumping to the lowest in 12 years earlier this year on signs the global glut will ease as US output declines. The market moved into a deficit earlier than expected following supply disruptions in Nigeria and an increase in demand, according to Goldman Sachs Group Inc.

"Disruptions to supply, rising demand and falling US output have helped to push prices up near the US$50 level," David Lennox, an analyst at Fat Prophets in Sydney, said by phone.

"Demand looks much more solid than we've seen for some years and will probably flow through into 2017. The high inventories in the US will continue to act as a strong headwind against any sustained rally."

West Texas Intermediate for June delivery gained as much as 27 US cents to US$48.58 a barrel on the New York Mercantile Exchange and was at US$48.42 at 8:10 am Hong Kong time.

The contract gained 59 US cents to US$48.31 on Tuesday, the highest close since Oct 9. Total volume traded was about 47 per cent below the 100-day average.

Brent for July settlement added 13 US cents, or 0.3 per cent, to US$49.41 a barrel on the London-based ICE Futures Europe exchange.

The contract increased 31 US cents to close at US$49.28 Tuesday, the highest settlement since Nov 3. The global benchmark crude traded at a premium of 34 US cents to WTI for July.

BLOOMBERG