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Bloomberg
Crude advanced for a third day after a further reduction in supply from Opec signaled that global markets are tightening.
Futures added as much as 1.3% to the highest level since November in New York on Tuesday. Declines in Opec production are stoking optimism among investors as Saudi Arabia pressed on with output curbs and as power blackouts in Venezuela further squeezed supplies. Meanwhile, US crude stockpiles probably declined by 900,000 barrels last week, according to a Bloomberg survey ahead of a government report on Wednesday.
“The fundamentals that drove us yesterday – the Opec production numbers falling, Venezuelan production issues, strong manufacturing numbers and lower US production – all of that is conspiring to take prices higher,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago.
Oil rallied about 37% this year as Saudi-led production cuts, together with receding fears over the global economic growth outlook, appear to be easing investor concerns.
West Texas Intermediate for May delivery climbed 64 cents to $62.23 a barrel at 10:18 a.m. on the New York Mercantile Exchange. The WTI prompt spread traded at a discount of eight cents, signaling a narrowing contango, a market structure where contracts in the near term are cheaper than those further out.
Brent for June settlement added 18 cents to $69.19 a barrel on the London-based ICE Futures Europe exchange. Brent’s prompt spread traded at 42 cents in backwardation, a market structure where prices in the near term are stronger than those further out. The global benchmark crude’s premium over WTI traded at $6.87 a barrel.
A chemical storage complex fire near Houston caught on fire last month, partially shutting the local ship channel and causing local refiners in need to crude to dial back production. That will likely cause some uncertainty ahead of supply data from the industry-funded American Petroleum Institute later Tuesday.
Overseas, production appears to be drying up. Venezuelan production slumped to less than 900,000 barrels a day last month, from around 1 million in February, as blackouts forced the key oil port of Jose to close for almost eight days. Also, the threat of additional U.S. sanctions is hanging over Iranian supply, while the White House is set to decide by early May whether to extend waivers allowing some countries to keep buying oil from the Persian Gulf nation.