Oil futures settled higher Wednesday, with the global benchmark marking its highest close since November, buoyed by reports of further reductions to global output and optimism around constructive U.S.-China trade negotiations.
U.S. benchmark prices, however, finished below the session’s best level, after data showed a fourth straight weekly rise in domestic crude supplies.
March West Texas Intermediate crude oil CLH9, +0.19% added 80 cents, or 1.5%, to settle at $53.90 a barrel on the New York Mercantile Exchange, off the intraday high of $54.60. It saw its highest settlement since Feb. 6, according to Dow Jones Market Data.
April Brent crude LCOJ9, +1.89% the international benchmark, gained $1.19, or 1.9%, to end at $63.61 a barrel on ICE Futures Europe, with the front month marking the highest finish since Nov. 19.
De facto leader of the Organization of the Petroleum Exporting Countries, Saudi Arabia, pledged to cut output further in the coming months, according to the Financial Times (paywall), citing oil minister Khalid al-Falih, who said the country would cut an additional 500,000 barrels a day to take production to 9.8 million barrels a day in March.
“This would be [approximately] 500,000 barrels per day less than stipulated in the production cuts agreement, meaning significant overcompliance with the requirements,” said analysts at Commerzbank in a research note.
Also Wednesday, the International Energy Agency said in a monthly report that global supply fell by 1.4 million to 99.7 million barrels a day in January.
The gains for crude come despite data from the Energy Information Administration Wednesday that revealed domestic crude supplies rose by 3.6 million barrels for the week ended Feb. 8. That marked a fourth-straight week rise, and was larger than the 2.7 million-barrel rise expected by analysts polled by S&P Global Platts. The American Petroleum Institute data on Tuesday showed a decline of 998,000 barrels.
“Despite a big drop in imports due to inclement weather on the Gulf Coast last week, a plumbing of the depths in terms of refinery maintenance has meant we have still seen a build to crude inventories,” said Matt Smith, director of commodity research at ClipperData.
Gasoline stockpiles edged up by 400,000 barrels last week, while distillate stockpiles were up 1.2 million barrels, according to the EIA. The S&P Global Platts survey had shown expectations for a supply rise of 800,000 barrels for gasoline, but distillates were expected to fall by 800,000 barrels.
March natural gas NGH19, +0.54% settled at $2.575 per million British thermal units, down 4.2%, ahead of Thursday’s EIA update on weekly domestic supplies.
Separately, a monthly EIA report released Tuesday revealed higher U.S. crude production forecasts for 2019 and 2020. The report also included higher WTI and Brent price forecasts for this year, but reduced the 2020 price views for both benchmarks by more than 4%.
With the monthly EIA report raising its U.S. production forecast and lowering demand for energy consumption, “we feel crude and the equity markets are due for a pause,” risking a downside move for both, said Tariq Zahir, managing member at Tyche Capital Advisors.
Also on Tuesday, OPEC said its crude output fell by 797,000 barrels a day in January, month on month, to average 30.81 million barrels a day, in the cartel’s separate monthly production update.
President Donald Trump on Tuesday said he is willing to delay a March 1 deadline for resolving the U.S.’s trade conflict with China if negotiations with Beijing are progressing smoothly. A high-level U.S. delegation led by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will hold talks on Thursday and Friday with Chinese Vice Premier Liu He, the top economic adviser to President Xi Jinping. A resolution to the dispute would ease worries about energy demand.
Sarah McFarlane contributed to this article
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