Prices were already trading broadly higher week to date, buoyed by expectations that the Organization of the Petroleum Exporting Countries and its allies will continue to support their production cut agreement, at least through June.
Broader financial market attention, meanwhile, was on a Federal Reserve meeting expected to conclude with no change to interest rates. Related commentary could set the tone for policy and economic growth in coming months, which can influence oil-demand expectations.
April West Texas Intermediate crude CLJ9, +1.37% rose 51 cents, or 0.9%, at $59.54 on the New York Mercantile Exchange. A settlement around this level for the contract, which expires at the end of Wednesday’s session, would mark the highest since November. May WTI CLK9, +1.28% which will be the front month, traded at $59.74, up 45 cents, or 0.8%.
May Brent crude LCOK9, +1.09% added 40 cents, or 0.6%, to $68.01 a barrel on ICE Futures Europe, with prices based on the front-month contract also set to finish at their highest since November.
The Energy Information Administration on Wednesday reported that U.S. crude supplies fell by 9.6 million barrels for the week ended March 15. Analysts polled by S&P Global Platts expected a climb of 1 million barrels. The American Petroleum Institute on Tuesday had reported a fall of 2.1 million barrels, according to sources.
“The large and higher than expected crude oil draw, as well as total petroleum stocks inventory draw, are pushing [U.S.] prices near the $60 [a barrel] level,” analysts at Drillinginfo wrote in a note released shortly after the EIA report. “Prices are also supported by expectations of deeper supply cuts by Saudi Arabia and Russia. However, increasing U.S. production and ongoing U.S.-China trade disputes are keeping a lid on price gains.”
The second-straight weekly decline in crude supplies follows a drop in oil imports from a year earlier, with imports averaging 6.6 million barrels a day over the past four weeks, down about 11% from the same period a year ago, EIA data showed.
Supplies of gasoline also dropped by 4.6 million barrels, while distillates fell by 4.1 million barrels last week, according to the EIA. The S&P Global Platts survey had shown expectations for supply declines of 2.1 million barrels each for gasoline and distillates.
April natural gas NGJ19, -1.64% traded at $2.823 per million British thermal units, down 1.7%, ahead of the EIA’s weekly update on supplies of the fuel due Thursday.
Overall, oil prices are “supported by ongoing supply cuts led by OPEC+ and U.S. sanctions against Iran and Venezuela, although gains remain capped by market concerns over economic growth,” said Dean Popplewell, an analyst with Oanda.
At a meeting earlier this week, the OPEC/non-OPEC Joint Ministerial Monitoring Committee, a production policy monitoring group that includes Saudi Arabia and Russia, said that “overall conformity” with the production cut agreement that began at the start of the year rose to almost 90% in February, up from 83% in January. OPEC members had agreed to trim 800,000 barrels a day from October’s production levels for six months through June of this year, with Russia and other allied producers cutting another 400,000 barrels a day to total 1.2 million barrels in cuts.
The United States Oil Fund LP (USO) was trading at $12.48 per share on Wednesday afternoon, up $0.20 (+1.63%). Year-to-date, USO has gained 3.91%, versus a 5.74% rise in the benchmark S&P 500 index during the same period.
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