Oil headed for its first annual advance in three years before supply cuts from OPEC and other producing nations next month intended to stabilize the market and reduce swelling global inventories.
Futures rose 0.3 percent in New York after losing 0.5 percent on Thursday, snapping an eight-day winning streak, as U.S. crude inventories unexpectedly expanded a second week. Stockpiles climbed by 614,000 barrels last week, the smallest gain since January, the Energy Information Administration reported Thursday. Analysts surveyed by Bloomberg had forecast a decline of 1.5 million barrels, while industry data showed an increase of 4.2 million barrels.
Oil is set for its biggest annual gain since 2009 as the Organization of Petroleum Exporting Countries and 11 nations from outside the group push ahead with a plan to cut output to trim the surplus. Focus will soon turn to compliance and whether producers will stick to their commitments. In the U.S., crude inventories remain at the highest seasonal level in more than three decades, according to weekly data compiled by the EIA since 1982.
“Going forward, the most important thing will be the unity of OPEC,” said Takayuki Nogami, chief economist at state-run Japan Oil, Gas and Metals National Corp. “They may initially comply with the agreement, but once one country stops doing so, there is a risk that everyone else will follow suit.”’
West Texas Intermediate for February delivery was at $53.94 a barrel on the New York Mercantile Exchange, up 17 cents at 2:02 p.m. in Hong Kong. The contract fell 29 cents to $53.77 on Thursday. Total volume traded was about 53 percent below the 100-day average. Prices are up 9.1 percent this month and about 46 percent this year.
Brent for March settlement rose 23 cents to $57.08 a barrel on the London-based ICE Futures Europe exchange. The February contract expired Thursday after losing 8 cents to $56.14. Front-month prices are up about 53 percent this year. The global benchmark crude traded at a premium of $2.19 to WTI.
See also: Oil market seen as surprise haven from political risk in 2017
U.S. crude stockpiles increased to 486 million barrels last week, according to the EIA. Crude production declined for a second week, while inventories at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, expanded by 172,000 barrels to 66.4 million barrels.
U.S. refiners exported record amounts of oil products last week, taking market share from struggling competitors in Mexico and the Caribbean. Resolute Energy Corp. ballooned by more than ninefold this year thanks to a pair of $100 million-plus deals in the nation’s most profitable shale patch. Now it’s aiming to double output in 2017.
Recommended for you
Read the latest opinion pieces from our Energy Voice columnists
- OPINION: Still time for hazardous industry operators to get ahead in digitisation
- Procurement and audit…the missing link? asks AAB
- Aberdeen still energy powerhouse as renewables combine with oil and gas to buoy hopes for the future
- Opinion: Mariner strike – Eat humble pie if needs be
- Decarbonising the UK: Why are we so cool on heat?