Rumors for decline in US stockpiles sends oil prices upward

Oil rebounded on speculation record U.S. crude stockpiles that have dragged prices below $50 and undermined OPEC’s output cuts may finally be set to shrink.

Futures for May delivery added as much as 0.8 percent in New York after falling 0.4 percent Wednesday. Speculation that refiners will increase oil purchases and reduce U.S. crude supplies grew after data Wednesday showed gasoline stockpiles slid a fifth week to the lowest since January and distillates dropped a sixth week to the least since December.

Oil dipped below $50 a barrel this month for the first time in 2017 as swollen U.S. inventories and rising American production weighed on output cuts by the Organization of Petroleum Exporting Countries and other producers. While OPEC won’t decide until May whether to prolong the curbs, officials will meet this weekend in Kuwait to discuss their deal’s progress.

“Oil trading around $48 a barrel seems to be the new range, and it will return to the old range above $50 a barrel if OPEC decides to extend its output deal,” said Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul. “Concerns over growing crude stockpiles in the U.S. are easing, considering reductions in refined fuel inventories.”

West Texas Intermediate for May delivery rose as much as 40 cents to $48.44 a barrel on the New York Mercantile Exchange and was at $48.28 at 7:55 a.m. in London. Total volume traded was about 49 percent below the 100-day average. The contract dropped.

Bloomberg

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