Oil rebounded from the biggest loss in more than a week as OPEC hinting at extending output cuts fanned optimism and investors anticipated a drop in U.S. stockpiles.
Futures in New York climbed 0.5 percent after losing 1.7 percent on Monday. Kuwait said the Organization of Petroleum Exporting Countries and allied producers will discuss extending an agreement to cut oil output into 2019. Adding to optimism, analysts surveyed by Bloomberg forecast U.S. crude inventories probably fell last week after holding below the five-year average the previous four weeks.
Oil surged to a three-year high last week after geopolitical risks such as the conflict in Syria and tensions between Saudi Arabia and Iran-backed rebels in Yemen raised concerns over potential supply disruptions. Record U.S. crude production remains a major worry for OPEC and its allies who have been battling to reduce a global glut via supply reductions for the last 15 months.
“OPEC and its allies are expected to control their supplies at levels that meet demand even after crude inventories decline,” Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo. Anticipation OPEC will continue to manage supply as well as “declining U.S. crude inventories should support oil prices.”
West Texas Intermediate for May delivery climbed as much as 42 cents to $66.64 a barrel on the New York Mercantile Exchange, and traded at $66.57 at 3:42 p.m. in Tokyo. The contract fell $1.17 to close at $66.22 on Monday. Total volume traded was about 19 percent below the 100-day average.
Brent for June settlement added 32 cents to $71.74 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.20 premium to June WTI.
Yuan-denominated futures for September delivery added 0.1 percent to 424.9 yuan a barrel on the Shanghai International Energy Exchange. The contract lost 0.6 percent on Monday.
OPEC and allied producers including Russia will consider continuing the global production limits beyond the end of the year when they meet in June to assess the market, Kuwaiti Oil Minister Bakheet Al-Rashidi said. The compliance rate for the 10 non-OPEC nations participating in the cuts rose to 85 percent in March from a revised 78 percent in February, according to Bloomberg calculations from preliminary output data by the International Energy Agency.
In the U.S., crude stockpiles probably fell 600,000 barrels last week, according to the median estimate in the survey before government data Wednesday. Nationwide inventories fell below the five-year average in March for the first time since 2014. Stocks in Cushing, Oklahoma, the delivery point for WTI futures, probably decreased 650,000 barrels last week, a Bloomberg survey shows, after rising for five weeks through April 6.
Other oil-market news:
China’s crude processing rose to a record on a daily basis in March as processing giants increased activity after the Lunar New Year holidays, according to data released by National Bureau of Statistics on Tuesday. Brent crude will climb to near $80 a barrel if President Donald Trump reimposes sanctions on Iran, says Abhishek Deshpande, JPMorgan Chase & Co.’s head of oil market research and strategy. Production from the world’s most prolific oil play is expected to set new records as drillers keep on adding more wells.