Oil gains on US supply as IEA says time needed to drain glut

epa04548401 (FILE) A file photo dated 22 November 1992 showing oil-pumping equipment standing abandoned at the oil well site near Surgut in Siberia, Russia. Global investors are worried by plummeting oil prices, which have fallen by about 50 per cent since the middle of the year as a result of a world-wide glut in oil and weak demand in the eurozone and China. The worries are reflected in rates of currencies and have also influenced global stock markets, with Japan's benchmark Nikkei 225 Stock Average plummeting three per cent and European shares posting further falls 06 January 2015 after US oil prices sank below the key 50-dollars-a-barrel mark. EPA/VADIM RUSAKOV

 

Bloomberg

Oil rebounded above $48 a barrel amid a reported decline in US crude stockpiles as the International Energy Agency said the market needs time to drain a global inventory glut.
Futures advanced as much as 2.4 percent in New York after slumping almost 11 percent the previous seven sessions. US inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report. Government data on Wednesday is forecast to show stockpiles rose for a 10th week. Oil markets are still struggling to clear a surge in supply from OPEC at the end of last year, according to the International Energy Agency.
Oil last week broke below $50 a barrel for the first time since December as rising US supply has swamped the impact of supply reductions from members of the Organization of Petroleum Exporting Countries and 11 other nations that started Jan. 1. While an OPEC report showed Saudi Arabia’s production climbed back above 10 million barrels a day in February, output still remains below a ceiling set under the six-month cut deal.
“We’ve had a severe decline in prices so it’s not a surprise to see a healthy bounce,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “Concerns are that agile U.S producers are replacing the OPEC production cuts. The official crude inventory numbers will be important.”
West Texas Intermediate for April delivery rose as much as $1.15 to $48.87 a barrel on the New York Mercantile Exchange and was at $48.53 at 9:28 a.m. in London. Total volume traded was about 10 percent above the 100-day average. Prices fell 68 cents to $47.72, the lowest close since November 29.
US STOCKPILES
Brent for May settlement rose as much as 84 cents, or 1.7 percent, to $51.76 a barrel on the London-based ICE Futures Europe exchange. Prices lost 0.8
percent to $50.92. The global benchmark crude traded at a premium of $2.52 to May WTI.
Oil stockpiles across developed nations increased in January
for the first time in six months after OPEC nations “relentlessly” raised production while finalizing an agreement to cut output, the IEA said in a report on Wednesday. While they’re now implementing more than 90 percent of the pledged curbs, the IEA predicted a smaller drop in inventories during the first half amid a weaker assessment of demand growth.

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