Signs of a possible gain in U.S. crude stockpiles have put the brakes on oil’s rally.
Futures were little changed in New York after advancing Tuesday to close at the highest level since December 2014. Industry data showed inventories rose by 4.76 million barrels last week, which will be the first gain in 10 weeks if confirmed by a government report on Wednesday. The Energy Information Administration is forecast to show supplies slid by 2 million barrels.
Oil has extended a two-year gain as the Organization of Petroleum Exporting Countries and its allies trim output to reduce bloated global stockpiles. While rising U.S. production is seen as a challenge to those supply cuts, Qatar’s Energy Minister Mohammed Al Sada said the market can absorb shale growth and will re-balance in the second half of 2018. The International Monetary Fund said the global economy this year will expand at the fastest pace since 2011.
“The market has been waiting for a pullback for a long time,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “There seems to be a collective view that it may not arrive and any break through recent highs could see a potential run to $72 for West Texas. Despite the fact that U.S. production has come back toward record levels, it appears traders are focused more on the increase in demand that we’re seeing.”
West Texas Intermediate for March delivery was at $64.42 a barrel on the New York Mercantile Exchange, down 5 cents, at 12:42 p.m. in Hong Kong. Total volume traded was about 7 percent below the 100-day average. WTI closed at $64.47 on Tuesday after advancing for a second session.
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Brent for March settlement lost 14 cents to $69.82 a barrel on the London-based ICE Futures Europe exchange after rising 1.4 percent on Tuesday. The global benchmark crude traded at a premium of $5.39 to WTI.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, decreased by 3.57 million barrels last week, the American Petroleum Institute was said to report Tuesday. Gasoline inventories rose by 4.12 million barrels, the API said.
OPEC’s pact to cut supply is more about oil’s price and near-term revenues rather than reducing inventories to their five-year average, Citigroup Inc. analysts including Chris Main said in a note. Falling heavy crude output in Venezuela could tempt other producers within OPEC with spare capacity to raise output this year, according to BMI Research in a Jan. 22 note.