Crude climbed to the highest since 2014 after across-the-board declines in U.S. stockpiles of oil, gasoline, diesel and jet fuel signaled increasing tightness in supplies.
Futures in New York rose 2.9 percent. An Energy Information Administration report showed shrinking American petroleum surpluses and the first crude withdrawal from the largest U.S. storage complex in six weeks. The U.S. draw-downs underlined optimism that an OPEC-led effort to curb global supplies will be reinforced later when the cartel and allied producers gather in Saudi Arabia.
“We continue to see extremely strong compliance” by OPEC nations to self-imposed supply limits, said Nick Holmes, an analyst at Tortoise in Leawood, Kansas, which manages $16 billion in energy-related assets. “It’s a multitude of factors that are contributing to that tighter inventory picture. Globally, we are seeing strong crude demand.”
Crude is trading at levels last seen more than three years ago ahead of an April 20 meeting of major oil producers in the Saudi city of Jeddah to discuss market cooperation. OPEC wants to lure more producers to join the output-reduction deal, U.A.E. Energy Minister Suhail Al Mazrouei said in a Bloomberg Television interview.
“Fundamentals definitely look better than they have at any point recently,” said Brad Hunnewell, senior equity analyst at Rockefeller & Co. “The fact that OPEC compliance is at the highest levels that it’s been at since really the start of this deal adds to a certain level of optimism.”
West Texas Intermediate for May delivery advanced $1.95 to settle at $68.47 a barrel on the New York Mercantile Exchange. Total volume traded was about 21 percent above the 100-day average.
Brent for June settlement climbed $1.90 to end the session at $73.48 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.01 premium to June WTI.
The EIA reported U.S. crude stockpiles dropped 1.07 million barrels, while supplies at the Cushing, Oklahoma, pipeline hub dropped by 1.12 million. Gasoline supplies fell 2.97 million barrels and distillate stocks slid 3.11 million barrels to the lowest level since November.
- Gasoline futures rose 1.3 percent to settle at $2.0683 a gallon, the highest level since August.
- Saudi Arabian crude production fell to 9.935 million barrels a day in February, according to data from the Joint Organisations Data Initiative.
- A sustained oil rally will likely have a spillover effect into other markets, Francisco Blanch, head of commodities research at Bank of America Merrill Lynch, said in a Bloomberg Radio interview.