Oil progressed from the highest close in over ten months before U.S. government data predicted crude stockpiles would drop for a third week.
After climbing 2.2 percent on Monday, futures rose to over $50 per barrel in New York. This is the largest gain in three weeks. According to a Bloomberg survey, inventories waned by 3 million barrels through June 3.
On Wednesday, Royal Dutch Shell PLC said it will not try to fix a major pipeline in Nigeria after militants attacked it for the second time this past week.
Despite unexpected interruptions and a constant decline in U.S. output, crude rose roughly 90 percent from a 12-year low in February. At this time, U.S. output is facing pressure from OPEC’s policy of pumping with no limit. Under a revised economic plan, permitted by their government to lessen dependence on oil, Saudi Arabia will continue the same level of production capacity until the year 2020.
Jans Naervig Pedersen, analyst at Danske Bank A/S in Norway, said in an email, “U.S. crude production is trending lower, gradually bringing down the surplus production and putting an end to stockpiling,” he continued, “this is an underlying supportive factor” for the upcoming year.
As of 8:50 am central time, West Texas Intermediate was trading $50.04 (an increase of 35 cents) per barrel for July delivery according to the New York Mercantile Exchange. On Monday, the contract gained $1.07 to $49.69, pulling in the biggest close since July 21. The total traded volume was approximately 31 percent below the 100-day average.
Per the ICE Futures Europe exchange in London, Brent increased 63 cents to $51.18 per barrel for August. As of Monday, prices closed at their highest since October 9. The global benchmark crude traded at 43 cents to WTI for August.
Stoxx Europe 600 Oil & Gas Index increased 2.1 percent to 279.76 after reaching its highest in more than two weeks. Tullow Oil PLC and Amec Foster Wheeler PLC brought in the largest gains.
Simon Henry, Chief Financial Officer at Shell, said the energy giant had to remove repair teams last week after a second attack against the 4-foot Forcados export pipeline. The pipe connects onshore storage tanks with an offshore port.
According to the estimated median in a Bloomberg Survey, crude stockpiles most likely decreased by 700,000 barrels last week in Cushing, Oklahoma. Cushing serves as the point of delivery for WTI and is considered the largest U.S. oil-storage site. The Energy Information Administration reported that nationwide inventories have fallen to by 1.37 million barrels 535.7 million through May 27.
Article written by HEI contributor Briana Steptoe.