Crude retreated after a government report showed U.S. stockpiles dropped from a record while production increased.
Futures in New York declined for the first time in seven sessions. Inventories fell 2.17 million barrels to 533.4 million, the U.S. Energy Information Administration reported Wednesday. A 1.5 million barrel decline was forecast by analysts surveyed by Bloomberg. Crude production climbed to the highest level in more than a year. Prices rose earlier on speculation that Saudi Arabia will support an extension to OPEC-led production curbs.
While speculation that the Organization of Petroleum Exporting Countries and its allies will extend their six-month pact aimed at eroding a global glut is helping boost prices, there’s also concern that rising U.S. output will counter the reductions. In its monthly report on Wednesday, OPEC boosted estimates for rival supplies as shale drillers emerge from the industry’s two-year slump.
“The market isn’t doing much because we’ve been anticipating a draw,” Adam Wise, who helps run a $7 billion oil and natural gas bond and private equity portfolio at John Hancock in Boston, said by telephone. “The market has had a strong run up and it’s taking a pause before the next move.”
West Texas Intermediate for May delivery slipped 26 cents, or 0.5 percent, to $53.14 a barrel at 11:59 a.m. on the New York Mercantile Exchange. Prices touched $53.76 earlier, the highest intraday price since March 7. Total volume traded was about 5.2 percent below the 100-day average.
Brent for June settlement slipped 37 cents, or 0.7 percent, to $55.86 a barrel on the London-based ICE Futures Europe exchange. The global benchmark oil contract traded at a $2.29 premium to June WTI.
American crude production rose by 36,000 barrels a day to 9.24 million barrels a day in the week ended April 7, the most since January 2016. U.S. oil drillers boosted the rig count to 672 last week, the most since August 2015, Baker Hughes data show.
Refineries processed 16.7 million barrels a day of crude, up 268,000 barrels from the prior week and the highest since January, according to the EIA.
“Overall supply and demand are coming into balance,” Brian Kessens, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kansas, who helps manage $17.1 billion in energy assets, said by telephone. “There’s a little less focus of the weekly inventory numbers and more on OPEC rhetoric.”