Oil pared losses as falling exports from Saudi Arabia and an improving global economic outlook offset rising U.S. output.
Futures fluctuated after earlier falling as much as 1 percent in New York. Saudi Arabian oil exports fell to 6.95 million barrels a day in February, the lowest since May 2015, according to data published Tuesday on the Riyadh-based Joint Organisations Data Initiative website. The International Monetary Fund raised its forecast for global growth on Tuesday. Crude output at major U.S. shale plays is forecast to climb to 5.2 million barrels a day in May, the Energy Information Administration’s monthly Drilling Productivity report showed.
Oil had rallied above $53 a barrel last week after some producers voiced support for prolonging a six-month supply-cut deal by the Organization of Petroleum Exporting Countries and its allies. OPEC ministers are scheduled to gather in Vienna on May 25 to discuss whether to extend the curbs. While U.S. shale output could come “roaring back,” supplies will start falling significantly as the curbs by OPEC and its partners continue, Citigroup Inc. said in a report.
“There’s a continuing push and pull in the market,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone. “The JODI data shows Saudi exports are down while their inventories are up, which shows their commitment to cuts. This is offsetting the report on rising shale output in the U.S.”
West Texas Intermediate for May delivery fell 4 cents to $52.61 a barrel at 10:48 a.m. on the New York Mercantile Exchange. Prices earlier touched $52.14, the lowest since April 7. Total volume traded was in line with the 100-day average.
Brent for June settlement fell 23 cent to $55.13 a barrel on the London-based ICE Futures Europe exchange, and traded at a $2.09 premium to WTI for the same month.
U.S. crude inventories probably shrank by 1.7 million barrels last week, according to a Bloomberg survey before an EIA report Wednesday. Stockpiles expanded to 535.5 million barrels at the end of March, the highest in weekly data compiled by Bloomberg since 1982.
- Oil producers are showing “very good” compliance with pledged production cuts, Saudi Energy Minister Khalid Al-Falih said Monday in Riyadh. While global supplies are rising because of refinery maintenance, the market is rebalancing, he said.
- Citigroup said OPEC output cuts will be able to offset the response of U.S. producers to higher prices. Goldman Sachs Group Inc. has called for the market to be patient.
- Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, fell by 570,000 barrels last week, according to a Bloomberg survey.