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Oil prices jump after data shows surprise U.S. stock draw

Published 03/15/2017, 01:52 AM
© Reuters. FILE PHOTO - Pump jacks drill for oil in the Monterey Shale California
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By Aaron Sheldrick and Osamu Tsukimori

TOKYO (Reuters) - Oil prices rebounded from three-month lows on Wednesday after industry data showed a surprise drawdown in U.S. crude stockpiles and as Goldman Sachs (NYSE:GS) put a positive spin on OPEC's compliance with output cuts.

U.S. West Texas Intermediate crude (CLc1) was trading up 83 cents, or 1.7 percent, at $48.42 a barrel by 0536 GMT. That came after the contract fell for a seventh session on Tuesday in its longest losing streak since January 2016.

Brent futures were up 76 cents, or 1.5 percent, at $51.68, after settling down 43 cents at $50.92 on Tuesday, their lowest finish since November.

U.S. crude stocks fell by 531,000 barrels last week, industry group the American Petroleum Institute said on Tuesday after settlement. [API/S]

That compared with analyst expectations for an increase of 3.7 million barrels. If the draw is confirmed by government data on Wednesday, it would be the first drawdown after nine consecutive builds.

U.S. gasoline and distillate inventories drew more than expected, the data also showed.

Oil tumbled on Tuesday after OPEC reported a rise in global crude stocks and a surprise output jump from its biggest member, Saudi Arabia, further pressuring prices that have erased nearly all of their gains since OPEC announced output cuts in November.

Secondary sources had said Saudi output fell in February to 9.797 million barrels per day (bpd), but Riyadh told OPEC it rose to 10.011 million bpd.

In an effort to dispel market concerns, the Saudi energy ministry said the "difference between what the market observes as production, and the actual supply levels in any given month, is due to operational factors that are influenced by storage adjustments and other month-to-month variables."

Influential U.S. investment bank Goldman Sachs cast a positive light on the numbers, saying compliance with production cuts remains high. Market rebalancing is still progressing and the bank expects demand for oil to finally exceed supply next quarter.

"Our expectations that inventories will draw through 2017 therefore leads us to expect that Brent timespreads will continue to strengthen with the forward curve in backwardation by 3Q17," Goldman said in its research note.

© Reuters. FILE PHOTO - Pump jacks drill for oil in the Monterey Shale California

OPEC's monthly report said oil stocks in industrialized nations rose in January to 278 million barrels above the five-year average, with U.S. shale and other non-OPEC supply gaining.

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