Oil pares gains as API reports gasoline supply surge

Bloomberg

Oil pared gains after the industry-funded American Petroleum Institute was said to report a jump in fuel stockpiles last week.
API was said to report that US gasoline stockpiles rose by 4.08 million barrels last week, outweighing a 4.62 million-barrel drop in crude supplies. Distillate stocks incre-
ased by 1.75 million barrels. A Bloomberg survey found that US crude inventories and gasoline stocks probably dropped last week. Prices eased after gaining as much as 2.1 percent. “Not only did gasoline stocks have a big build, but distillate was a decent build as well,” Kyle Cooper, director of research with IAF Advisors in Houston, said by telephone. “Clearly the expectation was for an overall draw.”
West Texas Intermediate for July delivery traded at $47.96 a barrel at 4:42 p.m. after settling at $48.19 a barrel on the New York Mercantile Exchange. Total volume traded was about 26 percent above the 100-day average. The spread between July and August WTI narrowed to a discount of 15 cents, the smallest contango for the rolling front-month spread since September 2015.
Contango, the market structure where the near-term contract trades at a discount to those for expiration later, narrowed between the July and August West Texas Intermediate crude contracts, lending to bullish sentiment during the session. “I wouldn’t be surprised if we saw the front spread get even a little bit stronger,” Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors, said by telephone. “That would definitely give a bid to crude prices.”
Brent for August settlement climbed 65 cents to end the session at $50.12 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $1.78 to WTI for the same month.
US crude inventories probably declined by 3.25 million barrels last week, according to a Bloomberg survey before the release of data from the Energy Information Administration on Wednesday. Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, probably decreased by 750,000 barrels, according to a forecast compiled by Bloomberg.
Oil has traded below $50 a barrel in New York since the Organization of Petroleum Exporting Countries and its partners agreed to extend output cuts into 2018 amid speculation that despite the curbs, a supply glut will persist. While American stockpiles have recently edged lower, output from the country has expanded to the highest since August 2015. Kuwait’s Oil Minister Issam Almarzooq told official news agency KUNA that Qatar is committed to the global oil-cuts deal, with a compliance rate of 93 percent to 102 percent.