Tokyo - Oil rebounded toward $63 a barrel from its first drop in four
sessions as investors weighed record compliance to output curbs by OPEC
and its allies against expanding US supplies and a broader
selloff in risk assets.
Futures in New York rose as much as 0.4% after slipping 0.5% on Monday. While US crude inventories are
forecast to have grown by 3.4 million barrels last week, that prediction
calls for a slower pace of expansion than the week prior.
The
Organisation of Petroleum Exporting Countries and its partners, which
are trying to ease a global glut via output cuts, are said to have
complied with pledged curbs at a rate of 138% in February.
Oil has swung around this month after registering its worst February
decline in half a decade as a global equity market rout spread to
commodities. US crude production that has boomed to a record as well
as rising American inventories are prompting speculation that OPEC and
its allies will have to extend output cuts into 2019 to reach the
group’s goal of reducing inventories to their five-year average.
“US shale production is putting a big cap on oil prices,”
Satoru Yoshida, a commodity analyst at Rakuten Securities, said by
phone from Tokyo. Still, “the oil market is quite firm. Even if prices
fall for various reasons, they rebound fairly quickly and there’s buying
support there.”
West Texas Intermediate for April delivery, which expires on Tuesday,
climbed as much as 25 cents to $62.31 a barrel on the New York
Mercantile Exchange and traded at $62.26 by 1:47 pm in Tokyo. The
contract fell 28c to $62.06 on Monday. The more-active May contract
climbed 20c to $62.33. Total volume traded was about 33%
below the
100-day average.
Brent for May settlement gained 21c to $66.26 on the
London-based ICE Futures Europe exchange, after slipping 0.2% on
Monday. The global benchmark crude traded at a $3.92
premium to WTI for the same month.
Nationwide crude inventories are at their highest since December and
probably added 3.4 million barrels last week, according to a Bloomberg
survey before the Energy Information Administration data due on Wednesday.
While supplies are set for a fourth weekly advance, the forecast build
is smaller than a 5-million-barrel increase the week earlier.
The Joint Technical Committee last month saw a record compliance rate
from OPEC members and its allies, according to people with knowledge of
the matter. The OPEC-12 compliance was 142%, while non-OPEC
countries were at 13%, one person said, asking not to be named
because the figures are not public.
In the meantime, stocks in Asia dropped for a third day, adding
bearishness to oil markets. The MSCI Asia Pacific
Index fell as much as 0.8%, following US equities lower after a
sell-off in technology shares dampened investor sentiment toward risky
assets.
Other oil-market news:
• Saudi Arabia’s exports of diesel and gasoline soared to a record in
January, underscoring a big advantage the world’s largest oil exporter
has over other producers who’re more dependent on shipments of
lower-value crude.
•
While US shale explorers are pumping record amounts of oil, the growth
rate is
flattening out for one closely watched category, drilled-but-uncompleted
wells.
• Bearish options
bets on the WTI curve are near the lowest in more than four years,
according to the latest CFTC data, despite the prompt WTI spread
flipping to contango.
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