Oil is poised for the biggest monthly advance in a year as U.S. production slumped to the lowest level since October 2014.
Futures are up about 21 percent this month in New York, set for a third monthly gain and the largest increase since April 2015. U.S. crude output declined for a seventh week, according to data Wednesday from the Energy Information Administration. Brent futures climbed to a five-month high in London.
“Sentiment has improved from the dark days of January,” Andy Sommer, an analyst at Axpo Trading AG in Dietikon, Switzerland, said by e-mail. “Indications of U.S. shale and some other non-OPEC production finally coming down is one of the drivers. But prices are too high now to keep the required pressure on operators to reduce production.”
Oil has rebounded after slumping to the lowest since 2003 earlier this year amid signs the global glut will ease as U.S. output falls. While U.S. production has slipped below 9 million barrels a day, crude stockpiles have continued to expand, climbing to the most since 1929, according to data from the EIA.
West Texas Intermediate for June delivery rose as much as 38 cents to $46.41 a barrel on the New York Mercantile Exchange and was at $46.38 at 9:53 a.m. London time. The contract climbed 70 cents to $46.03 on Thursday, the highest close since Nov. 4. Total volume traded was in line with the 100-day average. Prices are up 6.1 percent this week.
Brent for June settlement gained as much as 28 cents, or 0.6 percent, to $48.42 a barrel on the London-based ICE Futures Europe exchange. The contract expires Friday. The more-active July future rose 19 cents to $47.96. The global benchmark crude traded at a premium of $2.03 to WTI for June.
U.S. output has declined almost 300,000 barrels a day from this year’s high in January, according to EIA data. Nationwide inventories have increased to 540.6 million barrels, more than 100 million barrels above the five-year average. Source.