Oil resumed gains after the biggest drop in more than a week as industry data showed U.S. crude stockpiles declined, while OPEC and other producing nations trim production to ease a global glut.
Futures rose as much as 1 percent in New York after sliding 2.7 percent on Wednesday amid a surge in the dollar. U.S. crude supplies fell by 5.04 million barrels last week, the American Petroleum Institute was said to report. Government data Thursday is also forecast to show a decline. OPEC and 11 other producers are making “tremendous efforts” to cut output, according to the secretary-general of the Organization of Petroleum Exporting Countries.
Oil has held above $50 a barrel since OPEC and nations including Russia agreed late last year to trim supply by about 1.8 million barrels a day to reduce bloated global inventories. While producers from Saudi Arabia to Iraq have signaled they’re implementing the reductions, the International Energy Agency predicted a rebound in U.S. shale output as prices rise.
“There is clear evidence of a supply response from the U.S. but the market is full of optimism about the OPEC agreement,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “We’re seeing a trading range being established and the support level is around $50 a barrel.”
West Texas Intermediate for February delivery, which expires Friday, rose as much as 52 cents to $51.60 a barrel on the New York Mercantile Exchange and was at $51.50 at 1:49 p.m. in Hong Kong. Total volume traded was about 59 percent below the 100-day average. The contract lost $1.40 to $51.08 on Wednesday, the most since Jan. 9. The more-active March futures climbed 42 cents to $52.31.
Brent for March settlement added as much as 57 cents, or 1.1 percent, to $54.49 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $1.55, or 2.8 percent, to $53.92 on Wednesday. The global benchmark traded at a premium of $2.08 to March WTI.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, declined by 1.01 million barrels last week, the API reported Wednesday, according to people familiar with the data. Nationwide crude inventories probably fell by 1 million barrels last week, according to a Bloomberg survey before Energy Information Administration data.
• A five-nation committee set up to oversee adherence to the OPEC deal will have its first meeting on Jan. 22, where it will decide on the mechanism for assessing compliance, OPEC Secretary-General Mohammad Barkindo said in an interview in Davos.
• The heads of oil traders Gunvor Group and Mercuria Energy Group predict crude prices will range between $50 and $60 a barrel in 2017.
• WTI will average $60 a barrel in 2018, according to the median of 30 analyst estimates compiled by Bloomberg, just $5 higher than what they were forecasting a year ago for 2017.