Oil extends rally before OPEC meeting after U.S. stockpiles fall
Pubdate：2018-04-20 09:35
Source：liyanping
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LONDON (Bloomberg) -- Oil rallied above $69/bbl after a surprise drop in U.S. inventories added to signs the market is in balance before a key OPEC meeting.
Futures in New York rose as much as 1.2% after gaining 2.9% in the previous session. Focus is now shifting to whether OPEC and its allies will signal an extension of supply cuts at their meeting on Friday in Saudi Arabia. Total U.S. inventories of crude and fuel dropped below their five-year average for the first time since 2014, government data showed Wednesday.
At the gathering in the Saudi city of Jeddah, OPEC and Russia will discuss prolonging their cooperation, including new inventory targets that extend their output cuts beyond this year. The group’s goal of reducing global stockpiles to their five-year average is nearly reached, according to people with knowledge of the data. The meeting will play out against a backdrop of geopolitical tensions that have lifted prices and risk encouraging more U.S. supply.
“It would be foolish to go against the trend at the moment given how bullish the market has turned,” said Warren Patterson, commodities strategist at ING Groep. “The market will remain supported for the next couple of days with the meeting in Jeddah. What will be interesting is if they do readjust their target, in terms of changing from a five-year average.”
WTI for May delivery climbed as much as $0.80 to $69.27/bbl on the New York Mercantile Exchange, and traded at $68.81 in London. The contract climbed $1.95 to $68.47 on Wednesday. Total volume traded was 30% above the 100-day average.
Brent for June settlement added $0.48 to $73.96/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.10 premium to June WTI.
Futures for September delivery climbed 2.5% to 440.6 yuan/bbl on the Shanghai International Energy Exchange. The contract rose 0.5% to close at 429.7 yuan on Wednesday. Open interest in the contract rose to 7,314 lots in the previous session, the highest since its debut last month.
In the U.S., total inventories of crude and refined products, excluding strategic petroleum reserves, fell by 10.6 MMbbl last week to the lowest level since March 2015, according to Energy Information Administration data. American crude stockpiles slid by about 1 MMbbl, versus forecasts for a 650,000-bbl gain.
The EIA data also had another surprise. U.S. gasoline demand surged to a record high of 9.9 MMbbl a day before the summer driving season when consumption typically peaks. Stockpiles of gasoline fell by almost 3 MMbbl, compared with a 450,000-bbl increase expected in a Bloomberg survey.
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