NEW YORK, March 14 — Oil reduced its decline after the industry report showed US fuel stockpiles fell last week.
Futures in New York narrowed their decline after the American Petroleum Institute was said to have reported distillate inventories sank 4.26 million barrels and gasoline also fell. While nationwide crude stockpiles rose, Cushing, Oklahoma, the futures contract delivery point, declined for a 12th week.
That “caught the market by surprise,” said Phil Flynn, senior market analyst at Price Futures Group. “The distillate number was very supportive, much bigger than anticipated and I think it reflects the cold weather and it also reflects that producers are having a hard time keeping up with the distillate demand globally.”
Earlier, futures fell 1.1 per cent, and April futures slipped below May contracts. The US government expects major shale regions to boost output by 131,000 barrels a day in April, spurring fears that surging supplies will undermine OPEC’s efforts to clear a glut. Analysts forecast government data today will show a third consecutive increase in US inventories.
Oil has struggled to recover losses from last month’s broader market slump after topping US$66 (RM257) a barrel in January. While a brighter economic outlook has underpinned demand expectations, expanding American production remains a challenge to the Organisation of Petroleum Exporting Countries and its allies, which are trying to prop up prices via output curbs.
West Texas Intermediate for April delivery edged up to US$60.91 a barrel at 4.34pm after settling at US$60.71 a barrel on the New York Mercantile Exchange. The spread between the first two contracts settled at minus 4 cents, the first time it closed at a discount since January 22.
Brent for May settlement sank 31 cents to close at US$64.64 a barrel on the London-based ICE Futures Europe exchange. The global benchmark widened to a US$3.89 premium to May WTI.
Production from shale regions will reach 6.95 million barrels a day next month, the US Energy Information Administration said in its monthly drilling report. The Permian Basin is seen leading the way with an 80,000-barrel increase. Total American output has passed 10 million barrels a day, beating a record set in 1970.
“The EIA report yesterday about the expected increase in shale output next month certainly weighed on things,” John Kilduff, founding partner at Again Capital, said in a phone interview.
US crude inventories probably expanded by 2.5 million barrels in the week through March 9, according to a Bloomberg survey before EIA data today. Meanwhile, stockpiles at Cushing were little changed, according to data compiled by Bloomberg.
Oil market news
Futures sliding into contango is just one indicator signaling that prices may come under pressure President Donald Trump, ousting Secretary of State Rex Tillerson, said he had disagreed with the chief US diplomat over a nuclear accord with Iran.
Workers at Libya’s Zawiya oil-export terminal started a strike on Monday over delayed salary payments, according to people with knowledge of the matter. — Bloomberg