Oil settles up; extends gains as API reports U.S. crude draw
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Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo
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By Barani Krishnan
NEW YORK (Reuters) - Oil prices settled up on Tuesday on expectations of OPEC output curbs, then extended gains in post-settlement trade as an industry group's data showed an unexpected draw in U.S. crude inventories last week.
Crude stockpiles fell 3.8 million barrels in the week to Oct. 14, the American Petroleum Institute reported. Analysts had expected an increase of 2.7 million barrels. [API/S]
The U.S. government's Energy Information Administration (EIA) will issue official inventory numbers on Wednesday. If the EIA confirms the decline, it would be the sixth draw in the last seven weeks. Each has surprised analysts.
"It'll certainly be another hard-to-understand situation if there's a draw, as the kind of low refinery run rates we have now call for a build," said John Kilduff, partner at New York energy hedge fund Again Capital.
Refinery run rates
U.S. West Texas Intermediate (WTI) crude
Crude prices have gained some 13 percent since the Organization of the Petroleum Exporting Countries proposed on Sept. 27 its first output cut or freeze in eight years to rein in a global crude glut. The group gathers on Nov. 30 for its policy meeting.
Doubts on whether OPEC will reach a deal that satisfies all 14 members has stalled the rally at around $50 a barrel. Most in Saudi-led OPEC need higher prices to repair economic damage after crude fell to almost $26 a barrel this year from 2014 highs above $100. Some members of the cartel, like Iran, prefer not to cut output.
"We shorted WTI this morning at $51," said Phil Davis, trader at PSW Investments in Woodland Park, New Jersey. "We think ultimately that over the course of the next 30 days or so, it will drop down to $37.50 or possibly lower."
Some have a positive outlook for oil.
Analysts at Bernstein Energy said global oil inventories rose just 17 million barrels to 5.618 billion barrels in the third quarter, the smallest build since the fourth quarter of 2015.
Saudi crude exports in August fell to 7.305 million barrels per day from 7.622 million bpd in July, data showed on Tuesday.
(Additional reporting by Sabina Zawadzki in LONDON and Henning Gloystein in SINGAPORE; Editing by Chris Reese and David Gregorio)
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Create E-mail Alert Related CategoriesCommodities, Reuters
Related EntitiesOil Inventories, Sanford C. Bernstein, Hedge Funds, Crude Oil, OPEC
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