Oil price gain could snap long losing streak with supply data, Fed decision ahead
Weekly U.S. crude production and inventories report awaited
Oil prices rebounded slightly Wednesday from their long streak of losses, even as production data risks keeping downward pressure on prices.
Despite the price gains, sentiment largely remains gloomy on growing doubts whether the OPEC-Russia output-cut plan is delivering the expected results.
Investors are awaiting the weekly U.S. crude production and inventories report. A rise in either could knock prices down another notch.
Markets will also be monitoring the outcome of the two-day Federal Open Market Committee meeting, due for release at 2 p.m. Eastern. A decision to raise U.S. interest rates may boost the dollar, which would make dollar-denominated oil more expensive for foreign traders.
April West Texas Intermediate crude CLJ7, +1.87% rose 96 cents, or 2%, to $48.69 a barrel. Prices, trading near the lowest settlement levels since late November, tallied a seventh straight session loss on Tuesday. May Brent crudeLCOK7, +1.67% on the ICE Futures exchange in London gained 99 cents, or 1.9%, to $51.91 a barrel. If the gains hold throughout the day, it would snap the contract’s retreat over six consecutive sessions.
U.S. oil prices have fallen more than 10% this month and Brent prices have also dropped nearly 9%. The selling spree in the past five sessions was largely stoked by the strong growth of U.S. shale oil, which stands to offset the ongoing effort by the Organization of the Petroleum Exporting Countries to curb production.
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“Now, OPEC-Russia is looking more like a non-event because it is all about how fast and how much the U.S. producers will produce,” said Nelson Wang, a CLSA energy analyst.
Global oil supplies rose by 260,000 barrels a day in February to 96.52 million b/d, as both OPEC and non-OPEC producers pumped more crude, the International Energy Agency said on Wednesday.
In its closely watched monthly report, the agency, which advises industrialized nations on energy policies, said output from OPEC rose by 170,000 b/d in February to 32 million b/d.
OPEC’s latest report showed that Saudi Arabia said its production in February rose by 263,000 barrels a day, But, based on secondary sources, the kingdom actually trimmed its output last month. Discrepancy between two sets of data, both available in the OPEC’s monthly oil report, is not uncommon.
OPEC revised up its forecast for U.S. oil production growth by 100,000 barrels a day. It now believes U.S. oil flow will grow by 340,000 barrels a day based on the rising number of active oil drilling rigs in U.S. oil patches.
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week ended March 10 showed a 531,000-barrel decline in crude supplies, a 3.9-million-barrel decrease in gasoline stocks and a 4.1-million-barrel fall in distillate inventories, according to a market participant.
“The stockpiles [in the API report] fell for a change against the forecast and this was music to investor’s ear who were feeling the pressure,” said Naeem Aslam, chief market analyst with ThinkMarkets.
“Later today, we have crude inventory data due in the U.S. and if we see a similar message there, we could easily move back towards the level of $53,” he said.
April natural gas NGJ17, +1.60% rose less than 1 cent, or 0.2%, to $2.95 per million British thermal units.
Among oil-related exchange-traded funds, the United States Oil Fund USO, -0.88% rose 1.4% premarket.
—Jenny W. Hsu contributed to this article.