Oil Rises

Oil climbed above $59 a barrel as a report signaling a bigger-than-forecast drop in U.S. crude stockpiles added to concerns global supply is tightening.

(Bloomberg) — Oil climbed above $59 a barrel as a report signaling a bigger-than-forecast drop in U.S. crude stockpiles added to concerns global supply is tightening, even as the trade war continued to muddy the demand outlook.

Futures in New York gained as much as 0.9% after closing down 0.6% on Wednesday. The American Petroleum Institute said that U.S. inventories fell by 5.27 million barrels last week, according to people familiar with the data, compared with the median estimate for a decline of 1.36 million barrels in a Bloomberg survey. That would be the biggest drop since mid-March if confirmed by Energy Information Administration data due Thursday.

Oil is headed for the first monthly loss this year after a shattering of the trade truce between the U.S. and China threw the global growth outlook into question. Volatility has risen as traders are torn between trade war headlines and a combustible Middle East that’s threatening to disrupt oil flows. Against this turbulent backdrop, the Organization of Petroleum Exporting Countries and its allies haven’t been able to agree upon a date for their next policy summit.

The API report “is providing some support to crude this morning after overnight losses but not as much as one would have expected with an inventory draw-down of this size,” said Vandana Hari, founder of Vanda Insights, a Singapore-based provider of oil market analysis. The API’s estimate for an increase in gasoline stocks may have blunted the impact, she said.

West Texas Intermediate crude for July delivery rose 51 cents, or 0.9%, to $59.32 a barrel on the New York Mercantile Exchange as of 7:45 a.m. in London after climbing as much as 54 cents earlier. The contract is down 7.2% so far this month.

Brent for July settlement climbed 0.5% to $69.80 a barrel on London’s ICE Europe Futures after closing down 0.9% on Wednesday. The global benchmark crude was trading at a premium of $10.47 a barrel to WTI.

The API said that gasoline stockpiles rose by 2.71 million barrels last week. U.S. crude inventories have risen in four of the last five weeks through May 17 and are at 476.8 million barrels, the highest since mid-2017, EIA data shows.

The U.S.-China trade war continued unabated with a Fox Business Network host and a broadcaster for Chinese state television sparring over key trade issues on a live debate broadcast by the American network. That came after U.S. Secretary of State Mike Pompeo told Fox Business that Washington “may or may not get a deal” with Beijing.

“With every new headline indicating the trade war between the U.S. and China is turning fiercer” worries over the global economy and oil demand are dominating sentiment and limiting the impact of any bullish signs, Hari said.

SOURCE: RIGZONE.COM