Oil traded above $45 a barrel as investors assessed a report from the International Energy Agency, signaling it was less confident that global markets are rebalancing as anticipated.
Futures rose 0.5 percent in New York, after earlier dropping as much as 1.1 percent. The agency boosted estimates for global demand growth, yet said that stockpiles don’t appear to be declining as quickly as expected, as rising OPEC production threatens the rebalancing process. Data from the Energy Information Administration showed Wednesday that U.S. crude inventories fell by 7.56 million barrels last week, the biggest drop since September.
The IEA report isn’t “saying anything a whole lot that is new, which is why at least as things stand now, the market is kind of shrugging its shoulders,” Michael Wittner, head of commodities research at Societe Generale SA in New York, said by telephone.
Oil has traded below $50 a barrel since May amid concern rising global supply will offset curbs by the Organization of Petroleum Exporting Countries and its partners including Russia. OPEC’s first assessment of world markets in 2018 suggested that its current output of 32.6 million barrels a day — swollen by a recovery in Libya and Nigeria that are exempt from the cuts — will be too high.
The market is concerned “about the rebalancing going more slowly than expected and the view for next year is pretty much more of the same,” Wittner said. “This is what the market has been coming to grips with in the last month or two. That’s why we are treading water in a $45-$50 range.”
West Texas Intermediate for August delivery climbed 23 cents to $45.72 at 9:59 a.m. on the New York Mercantile Exchange, after earlier declining to as low as $44.99. Total volume traded was about 10 percent above the 100-day average. Prices rose 45 cents to $45.49 on Wednesday.
Brent for September settlement added 13 cents to $47.87 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 22 cents, or 0.5 percent, to close at $47.74 on Wednesday. The global benchmark crude traded at a premium of $2.02 to September WTI.
In the U.S., crude production rose by 59,000 barrels a day to 9.4 million in the week ended July 7, according to the EIA. Gasoline stockpiles fell by 1.65 million barrels to 235.7 million.
- Three years into the biggest oil downturn in a generation, industry bosses gathered at the World Petroleum Congress in Istanbul see the recovery slipping further from view.
- Nigeria signaled its willingness to cap its output when it increases to 1.8 million barrels a day to support OPEC’s efforts to ease a global glut. The producer is currently pumping 1.7 million barrels a day of crude.