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Oil closes higher as tight market awaits snapshot on shale boom
[LONDON] Oil edged higher as investors weighed tightening global supplies against expectations for another boost in US crude inventories.
Futures in New York gained 1 per cent on Tuesday, after wavering between gains and losses. Stockpiles, already at the highest since 2017, are set to rise for a fourth week, according to a Bloomberg survey ahead of government data due Wednesday. Gasoline inventories, however, are forecast to fall for a ninth week.
‘‘The market has taken a little bit of a breather,'' said Kyle Cooper, a consultant at Ion Energy Group in Houston. ‘‘Inventory trends have overall been very bullish. So unless the overall economies collapse, and given the risk for lower production out of Venezuela and still lackluster supply outside of the US, I think it's an uptrend.''
Oil has rallied around 40 per cent this year as the Organization of Petroleum Exporting Countries (OPEC) and allied producers including Russia cut output. While involuntary losses in Iran, Venezuela and Libya have further restricted supply, record US shale-oil production and signs of increased drilling activity are complicating OPEC's efforts to re-balance the market.
West Texas Intermediate for May delivery rose 65 US cents to US$64.05 a barrel on the New York Mercantile Exchange at the close of the trading session, after falling to a one-week low a day earlier.
Brent for June settlement rose 54 US cents to US$71.72 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of US$7.53 to WTI for the same month.
US crude inventories rose by 2.3 million barrels last week, according to the median estimate of analysts surveyed by Bloomberg before Energy Information Administration data. US shale output is forecast to rise by 80,000 barrels a day to 8.46 million in May, according to the EIA's Drilling Productivity Report on Monday.
"Everybody's waiting to see what happens with inventories," said Ashley Petersen, an oil analyst at Stratas Advisors LLC in New York. "We've run out of good news to reinforce the momentum of the market right now."