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London - Oil rose after industry data showed US crude stockpiles declined for a fifth week, trimming an inventory overhang.
Futures gained as much as 1.2% in New York after falling 1.2 percent on Tuesday. Inventories dropped by 5.79 million barrels last week, the American Petroleum Institute was said to report.
Government data on Wednesday will show a 2 million barrel decline, according to a Bloomberg survey. The Energy Information Administration boosted its estimate for average US output this year to 9.31 million barrels a day, up from 9.22 million a day projected in April.
Brent crude, the global benchmark, continues to hold below $50 a barrel despite Saudi Arabia and Russia signaling they could extend cuts into 2018 to bring inventories down further. Prices are being held back as the EIA sees US production climbing to a record next year. Shale explorers are boosting drilling budgets 10 times faster than the rest of the world.
“Is the oil inventory overhang being reduced at a faster pace due to the cuts? That dynamic will be a major force at play for the next OPEC meeting in two weeks time,” said Giovanni Staunovo, an analyst at UBS in Zurich. “In the US, considering the rigs added over the last six months, a supply response will come in the second half of the year.”
West Texas Intermediate for June delivery climbed as much as 55 cents to $46.43 a barrel on the New York Mercantile Exchange, and traded at $46.35 at 10:29. Total volume traded was about 3% below the 100-day average. The contract lost 55c to $45.88 on Tuesday.
US stockpiles
Brent for July settlement was 43c higher at $49.16 a barrel on the London-based ICE Futures Europe exchange after rising as much as 54c. Prices slid 61c to $48.73 on Tuesday. The global benchmark crude traded at a premium of $2.41 to July WTI.
Oil inventories in the US have been declining after climbing to the highest level in more than three decades at the end of March.
The EIA said domestic output will climb to a record 9.96 million barrels a day in 2018, up from 9.9 million barrels projected last month, according to the agency’s monthly Short-Term Energy Outlook released on Tuesday.
Oil-market news:
OPEC’s estimate of its oil production last month, compiled from five of six external data known as secondary sources, fell to 31.732 million barrels a day, according to a person familiar with the matter. Global oil stockpiles are building slower than expected on a seasonal basis, Goldman Sachs analysts including Jeffrey Currie wrote in a May 9 note.
OPEC will review “ several options” at next meeting, United Arab Emirates Energy Minister Suhail Mazrouei said. Increased US production is “not a huge threat for us not to roll over” production cuts, he said.
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