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Oil jumps after lower than expected US stock build
[LONDON] Oil prices jumped more than a dollar on Wednesday after a lower than expected build of crude oil stocks in the United States.
Crude stocks there rose 1.29 million barrels to 483.69 million barrels in the week to April 10, the US Energy Information Administration said on Wednesday, against a forecast of a 4.1 million barrel rise from a Reuters survey of analysts.
Front-month May Brent crude futures were up US$1.35 cents at US$59.78 by 1438 GMT ahead of their expiry later today. US crude futures had gained US$1.60 to reach US$54.89.
The spread between Brent and WTI front-month futures was US$5.11, after touching US$4.78, its lowest since Feb. 3.
In the United States, North Dakota's February oil production fell by 15,000 barrels per day (bpd) versus January, although the number of producing wells hit a record high.
That followed a US Energy Information Administration (EIA) report forecasting US shale production would fall by 45,000 bpd to 4.98 million bpd in May, which would be the first monthly decline in four years.
Russia has been holding active "unprecedented" consultations with the Opec, a senior official said. Russia has however dismissed any suggestion it might cut output.
Prices also drew support from tensions in the Middle East, where fighting continued in Yemen. A Saudi Arabian-led campaign of air strikes against Iran-allied Houthi rebels threatened to turn into a ground intervention after Egypt said it had discussed military manoeuvres with Saudi Arabia and other Gulf allies.
"Any instability's always going to keep (prices) fairly buoyant," said Rob Montefusco, a senior trader at Sucden Financial.
But world oil markets may take longer to tighten than expected due to supply rising faster than demand, the IEA said on Wednesday. Opec production surged to 31.02 million bpd in March, almost a two-year high, outweighing a rise in demand.
"Recent developments thus may call into question past expectations that supply and demand responses would tighten the market from mid-year on," the IEA, which advises industrialised countries on energy policy, said in a monthly report.
However, while an oil supply shortage may be the last thing on investors' minds, the ability of Opec producers to cope with an unexpected surge in demand is diminishing fast, analysts and forecasters say.