Oil holds gains above $49

Oil holds gains above $49

Yesterday oil held gains above $49 a barrel in New York as U.S. production eased and crude inventories extended declines, trimming a glut.

As Bloomberg writes in the article Oil Drops After Failure to Hold $50 Even as Stockpiles Shrink, futures advanced 0.3 percent after climbing 0.8 percent Wednesday. Output slid for the second time in three weeks, according to Energy Information Administration data, while stockpiles dropped by 6.45 million barrels, almost triple the median forecast in a Bloomberg survey. Gasoline inventories unexpectedly rose for the first time since early June.

Oil has fluctuated below $50 a barrel for more than a week as investors weigh rising global supply against output cuts by members of the Organization of Petroleum Exporting Countries and its allies including Russia. While U.S. crude stockpiles have declined during a period of strong seasonal demand, they remain almost 90 million barrels above the five-year average.

“This leg higher was driven by a strong draw in U.S. crude stocks,” said Jan Edelmann, an analyst at HSH Nordbank AG in Hamburg. “The rebalancing of the oil market is happening with demand catching up with supply.”

West Texas Intermediate for September delivery was at $49.73 a barrel on the New York Mercantile Exchange, up 17 cents, at 9:43 a.m. London time. Total volume traded was about 31 percent above the 100-day average. Prices rose 39 cents to $49.56 on Wednesday, the first gain in three sessions.

Brent for October settlement rose 28 cents to $52.98 a barrel on the London-based ICE Futures Europe exchange, after adding 56 cents on Wednesday. The global benchmark crude traded at a $3.13 premium to October WTI, the widest since November 2015, according to data compiled by Bloomberg. The front-month spread has widened about 44 percent since the beginning of this year.

U.S. crude production dropped by 7,000 barrels a day to 9.42 million a day last week, the EIA reported Wednesday. Gasoline inventories expanded by 3.42 million barrels, the biggest weekly advance since January.

Oil-market news:

OPEC and its allies invited nations including Iraq and the United Arab Emirates to a Joint Technical Committee meeting in Vienna on Aug. 21, according to two people familiar with the matter.

Saudi Arabia’s Crown Prince Mohammed bin Salman discussed economic and energy investment opportunities with Iraqi Oil Minister Jabbar al-Luaibi in Jeddah, the state-run Saudi Press Agency reported.