Oil extends gains as industry report shows US stockpile drop

Bloomberg

Oil extended its advance as industry data showed US crude stockpiles declined last week, trimming an inventory overhang. February futures rose as much as 0.9 percent in New York after climbing 0.5 percent on Tuesday. Crude inventories dropped by 4.15 million barrels, the American Petroleum Institute was said to report. That compares with a forecast 2.5 million-barrel decrease expected in Wednesday’s Energy Information Administration report. Libya reopened two of its biggest oil fields and is set to load the first crude cargo in two years from its largest export terminal.
Oil has traded near $50 a barrel since the Organization of Petroleum Exporting Countries agreed Nov. 30 to cut output for the first time in eight years. Non-OPEC producers including Russia will also trim supply. US crude inventories, at the highest seasonal level since the EIA began compiling weekly data in 1982, are projected to decrease for a fifth week.
“Tightening US crude inventories is supportive for oil,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. “That looks like it’ll continue and that’s bullish for prices. Returning Libyan supply could be an issue for the market.”
West Texas Intermediate for February delivery gained as much as 46 cents to $53.76 a barrel on the New York Mercantile Exchange and was at $53.72 at 8:02 a.m. in London. The January contract expired Tuesday after adding 11 cents to $52.23 a barrel. Total volume traded was about 40 percent below the 100-day average.
Brent for February settlement rose as much as 47 cents, or 0.9 percent, to $55.82 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 43 cents to $55.35 on Tuesday. The global benchmark crude traded at a premium of $2.05 to WTI.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, increased by 609,000 barrels last week, the API reported Tuesday, according to a person familiar with the data.
Pipelines connecting the Sharara oil field in Libya to the Zawiya refinery and the El-Feel field to the Mellitah energy complex reopened at the town of Rayayina, according to a statement by the state-run National Oil Corp. OPEC’s agreement to reduce oil production may help send prices above $70 a barrel next year, according to Citigroup Inc.’s Ed Morse. Kuwait Petroleum Corp. will cut contracted volumes to customers around the world, including some in the US, according to a company official, who asked not to be identified because contracts are a private matter.