Oil Decline Eases
Oil futures pared losses in New York after a U.S. industry report was said to show a drop in crude and gasoline stockpiles. The American Petroleum Institute’s tally for American crude supplies shrank by 4.16 million barrels last week, and the one for gasoline fell by 1.93 million, people familiar with the data said Tuesday. In an Energy Information Administration report due Wednesday, crude stockpiles are forecast to have decreased, while fuel supplies are seen rising, according to a Bloomberg survey, according to Bloomberg's article Oil Falls as U.S. Crude Supply Glut Seen Shifting to Fuel Tanks.
Oil has fallen the past two weeks on concern that increasing U.S. crude production will offset efforts by the Organization of Petroleum Exporting Countries and its allies to eliminate a global supply glut. OPEC will meet again May 25 in Vienna to decide whether to extend the cuts through the second half of the year. There seems to a be a general consensus to do so, Khalid Al-Falih, the Saudi minister of energy and industry, said last week. Industry data showed American rigs targeting oil rose to the highest level in two years.
“The reaction is warranted given a rather bullish set of stats,” Kyle Cooper, director of research with IAF Advisors in Houston, said by telephone. “If the EIA in some fashion confirms these draws and crude is unable to rally, then I’d say it’s an extraordinarly bearish price reaction.”
West Texas Intermediate for June delivery traded at $48.13 a barrel as of 6:02 p.m. in New York after settling at $47.66. Total volume on the New York Mercantile Exchange was about 11 percent above the 100-day average.
Brent for July settlement fell $1.06, or 2.4 percent, to $50.46 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $2.47 premium to July WTI.
The EIA is forecast to show that crude stockpiles dropped by 3 million barrels last week, according to the Bloomberg survey. U.S. gasoline supplies probably rose by 1 million barrels and inventories of distillate fuel, a category that includes diesel and heating oil, by 2 million.
OPEC output fell by 40,000 barrels a day to 31.895 million barrels in April, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Iraq, the second-biggest producer in the group, and Venezuela came closer to their targets.
Among the 10 members bound by the caps, compliance strengthened to 102 percent from 89 percent in March, the survey showed. Total output -- including Libya and Nigeria -- remains 135,000 barrels a day above target, putting the group about 90 percent of the way toward its goal.
All countries participating in the cuts must agree to any extension, United Arab Emirates Energy Minister Suhail Al Mazrouei said Tuesday in the U.A.E. capital Abu Dhabi. Russia believes that extending last year’s oil-output deal with OPEC makes sense for at least six more months given current market situation, a Russian government official with knowledge of the matter said, asking not to be named as the decision isn’t public yet.