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Oil rises toward $63 as OPEC cuts weighed against US supplies
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An Ambar Block oil and gas rig located in located in offshore Java (Courtesy of/www.nrgedge.net)
O
il 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 percent after slipping 0.5 percent 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 Organization 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 percent 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 p.m. in Tokyo. The contract fell 28 cents to $62.06 on Monday. The more-active May contract climbed 20 cents to $62.33. Total volume traded was about 33 percent below the 100-day average.
