Oil stays above US$60 on US storage drawdown, Opec+ output cuts

Seoul

OIL held above US$60 a barrel on Thursday after the biggest withdrawal of crude in American storage tanks since July raised speculation that global supplies are tightening.

Futures for May in New York were little changed after the April contract reached the highest level this year before expiring on Wednesday. US government data showed a 9.59-million-barrel decline in nationwide stockpiles, exceeding analysts' expectations. Crude exports from the country were near a record high while imports from Saudi Arabia fell by more than half, and it stopped shipments from Venezuela altogether.

Crude broke above US$60 a barrel for the first time since November as output reductions by the Organization of Petroleum Exporting Countries and its partners, as well as supply disruptions in Venezuela and Iran, countered growing US shale production. Meanwhile, the Federal Reserve said interest rates could be on hold for "some time", thawing investor concerns over weakening global growth that would dampen oil demand.

"American crude inventories are coming down quickly with the Opec+ coalition making collective effort to curtail output and these are taking oil prices above US$60 a barrel," Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp, said by phone in Seoul. "While it may be difficult to see crude breaching US$65 in the near term, quite bullish demand and supply picture will keep prices buoyed."

West Texas Intermediate for May delivery was at US$60.10 a barrel, down 13 cents, on the New York Mercantile Exchange at 7.32am in London. The April contract gained 1.4 per cent to US$59.83 before expiring on Wednesday at the highest close since Nov 12.

Brent for May settlement was up 2 cents at US$68.52 a barrel on the London-based ICE Futures Europe exchange. Prices rose 1.3 per cent on Wednesday, rising for a third straight session. The global benchmark crude was at a premium of US$8.39 to WTI.

In the US, crude inventories declined to 439.5 million barrels last week, while the median forecast in a Bloomberg survey of analysts predicted an increase of 1.75 million barrels. At the same time, the country's oil exports climbed to 3.39 million barrels a day, the second highest weekly rate on record since 1993.

Still, America's nationwide crude stockpiles are above the five-year average of 432 million barrels for this time of the year. Surging US production, which climbed again last week to a record level of 12.1 million barrels a day, continues to undermine Opec and its partners' effort to trim a global surplus.

Meanwhile, Federal Reserve officials scaled back their projected interest-rate increases this year to zero. Chairman Jerome Powell said at a press conference on Wednesday that incoming data indicate that the central bank should "remain patient" as global risks weigh on the economic outlook and inflation continues to stay muted. BLOOMBERG