adminLondon – Oil in New York extended gains after a report showed crude stockpiles in the US declined last week, easing a supply glut. February futures climbed as much as 1.8 percent in New York to the highest intraday price in a week. Inventories fell by 3.6 million barrels, the industry-funded American Petroleum Institute was said to report Tuesday before government data yesterday.
West Texas Intermediate traded at a premium over Brent for the first time since January on expectations that the recent US decision to end a 40-year ban on crude exports may ease the nation’s oversupply.
“The API data is giving prices some support today,” Olivier Jakob, managing director of industry consultant Petromatrix GmbH in Zug, Switzerland, said by phone. “Crude oil prices are already very low, fundamentals are still very weak and the market is looking for direction on trading.”
Oil is heading for a second yearly loss on signs a global glut will be prolonged after the Organisation of Petroleum Exporting Countries (Opec) effectively abandoned output limits at a meeting earlier this month. Brent, the benchmark for more than half the world’s crude, is poised to end 2015 with the lowest annual average price in 11 years, putting pressure on the budgets of oil-producing countries and companies alike.
WTI for February delivery increased as much as 66 cents to $36.80 a barrel on the New York Mercantile Exchange and was at $36.67 as of 14:09. The contract gained 33c to $36.14 on Tuesday. The volume of all futures traded was about 28 percent below the 100-day average. Front-month prices have decreased 31percent this year.
Brent for February settlement climbed 58c to $36.69 a barrel on the London-based ICE Futures Europe exchange. The contract lost 0.7 perccent to $36.11 on Tuesday, the lowest close since July 2004. The European benchmark crude was at a discount of 2c to WTI.
“With WTI now pretty much at parity with Brent, and Brent being the global oil benchmark, that really indicates a massive oversupply situation in the world,” Victor Shum, a Singapore-based vice president at consultant IHS Inc., said in a Bloomberg Television interview. “Oil prices may continue to stay low.”
The API data contrast with a Bloomberg survey earlier this week, which showed US crude inventories probably continued to expand, reaching the highest level in weekly data since August 1982. Supplies are more than 130 million barrels above the five-year seasonal average. — Fin24
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