Crude rises to highest since 2014 on bullish USA inventory report

Oil prices climbed Wednesday to settle at their highest levels in almost 3 1/2 years, following a surprise decline in weekly USA crude supplies and expectations that major oil producers will remain committed to curbing production.

Futures in NY rose as much as 2%, extending their gain beyond last week's three-year high.

After API's Tuesday estimate of a 1.047-million-barrel crude oil inventory draw pushed prices higher, the Energy Information Administration added optimism by confirming a draw, albeit a smaller one, at 1.1 million barrels.

The latest demonstration was oil prices' reaction to the Western strikes in Syria, which failed to result in any sustainable price increase after the initial jump. The United States has started talking to North Korea directly, President Donald Trump said April 17, helping to buoy some equity markets.

"The product draws were a bit surprising", Tamas Varga, analyst at PVM Oil Associates, said, referring to the drop in gasoline and distillate inventories reported by the API.

The premium for June 2018 over June 2019 prices for Brent and WTI is $5.5 and $6 per barrel respectively, creating a market structure known as backwardation in which it is attractive to sell crude immediately instead of keeping it in storage for later sale.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were up 59 cents, or 0.9 percent, at $67.11 a barrel. Futures traded at $67.68 at 8:44 a.m.

Brent for June settlement added $1.13 to $72.71/bbl on the London-based ICE Futures Europe exchange, after touching $72.84, the highest since April 16.

Nationwide crude inventories decreased 1.05 MMbbl last week in the US, the API reported, according to people familiar. Stockpiles of gasoline fell by 2.5 MMbbl, outpacing the 450,000 bbl increase expected in a Bloomberg survey. In its latest monthly Drilling Productivity Report, the EIA said that US shale production is expected to increase by 125,000 bpd in May over April, with the Permian production surging by 73,000 bpd, Eagle Ford's-by 24,000 bpd, and the Bakken's by 15,000 bpd.

Saudi Arabia's crude oil exports rose to 7.251 MMbpd in February, according to JODI data.

OPEC's ministerial committee tasked with monitoring the group's supply-cutting deal with non-OPEC countries, led by Russian Federation, meets in the Saudi city of Jeddah on Friday.

  • Wendy Palmer