Oil held gains near $52 a barrel as U.S. industry data showed gasoline stockpiles declined and as OPEC negotiates an exit strategy to output cuts alongside an extension of the deal.
Futures were little changed in New York after rising 1.1 percent on Tuesday. Motor fuel inventories dropped by 5.75 million barrels last week, the American Petroleum Institute was said to report. Government data Wednesday is forecast to show gasoline stockpiles rose a fifth week. The exit strategy is in an effort to reassure investors OPEC won’t flood the market once curbs finally expire, according to people familiar with the talks.
Oil is holding gains above $50 a barrel as speculation mounts supply curbs by members of the Organization of Petroleum Exporting Countries and its allies including Russia will be extended when OPEC meets in Vienna on Nov. 30. The group and its partners, which together control more than half the world’s crude output, last week sent the strongest signal yet that their deal will be extended beyond the current expiry in March until the end of 2018.
“There is definitely room for prices to move higher,” said Daniel Hynes, a Sydney-based analyst at Australia & New Zealand Banking Group Ltd. “Reports that OPEC are considering an extension to cuts is supportive and has been for a little while now. Tightness in the market appears to be accelerating.”
West Texas Intermediate for December delivery was at $52.37 a barrel on the New York Mercantile Exchange, down 10 cents, at 7:50 a.m. in London. Total volume traded was about 46 percent below the 100-day average. Prices added 57 cents to $52.47 on Tuesday.
Brent for December settlement rose 5 cents to $58.38 a barrel on the London-based ICE Futures Europe exchange. Prices gained 1.7 percent to $58.33 on Tuesday. The global benchmark crude traded at a premium of $6.02 to WTI.
An Energy Information Administration report Wednesday is forecast to show U.S. crude stockpiles fell by 3 million barrels last week in what would be a fifth weekly decline, according to the median estimate in a Bloomberg survey of analysts. The API data showed supplies expanded last week.
OPEC’s talks on an exit strategy are at a preliminary stage and the group is likely to endorse the outline of the plan when they meet next month, according to people familiar with the matter. Iraq’s semi-autonomous Kurdistan Regional Government said it’s prepared to freeze the results of last month’s independence referendum that led to deadly clashes with government troops and hurt oil exports.
Recommended for you
Read the latest opinion pieces from our Energy Voice columnists
- OPEC decision: how much more oil will this bring the market?
- OPINION: Decom giveaway laudable, but surely better to leave in place
- OPINION: Microsoft data centres – why Orkney?
- Propelling innovation through gender diversity offshore
- Opinion: Firms must strive to attract workers back to sector as skills shortage looms