Oil extended gains above $49 a barrel as U.S. government data showed an unexpected fall in crude stockpiles, the first decline this year.
Futures rose as much as 0.7 percent in New York after advancing 2.4 percent on Wednesday, snapping a seven-session decline. Crude stockpiles dropped by 237,000 barrels last week, according to an Energy Information Administration report. A Bloomberg survey had forecast a 10th weekly expansion. Iraq plans to increase output to 5 million barrels a day by the end of 2017, Oil Minister Jabbar Al-Luaibi said at a news conference in the southern city of Basra.
Oil last week broke below $50 a barrel for the first time since December as rising U.S. supply countered output reductions by members of the Organization of Petroleum Exporting Countries and other nations. While an OPEC report on Tuesday showed Saudi Arabia’s production climbed back above 10 million barrels a day in February, it still remains below a ceiling set under the six-month cut deal that started on Jan. 1.
“The rebalancing story hasn’t changed,” said Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore. “The fall in crude prices was due to increased concerns about U.S. oil inventories and supply, but demand is looking good. We expect prices to slowly climb higher.”
West Texas Intermediate for April delivery rose as much as 34 cents to $49.20 a barrel on the New York Mercantile Exchange and was at $49.13 at 2:57 p.m. in Singapore. Total volume traded was about 29 percent below the 100-day average. Prices climbed $1.14 to close at $48.86 on Wednesday after falling almost 11 percent the previous seven sessions.
Brent for May settlement advanced as much as 40 cents, or 0.8 percent, to $52.21 a barrel on the London-based ICE Futures Europe exchange. Prices rose 89 cents to $51.81 on Wednesday. The global benchmark crude was at a premium of $2.46 to May WTI.
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U.S. crude inventories fell from the highest level in more than three decades to 528.2 million barrels, the EIA said in a report on Wednesday. Oil production rose for a fourth week to 9.1 million barrels a day.
Iraq exported 3.87 million barrels a day from its southern and northern shipment hubs in February, Oil Ministry Spokesman Asim Jihad said in an emailed statement. China’s in talks with Saudi Arabia for its sovereign wealth fund and largest energy company to invest in the initial public offering of the Middle East nation’s state oil producer, according to people with knowledge of the matter. Oil markets are still struggling to clear a surge in supply from OPEC at the end of last year, according to an International Energy Agency report on Wednesday.