HL: Oil Heads for Record Run of Weekly Gains Amid Easing Supply Glut
Oil headed for a 10th weekly advance, the longest rising streak since trading started in 1983, amid signs that a glut of crude stockpiles in the U.S. is easing.
Futures fell as much as 0.7 percent in New York, trimming this week’s gain to 1.2 percent. Crude supplies slid for a third week in the longest run of declines since September, according to government data. OPEC will continue to favor market share over prices when it meets next month because rival producers are already starting to buckle, a Bloomberg survey shows.
Oil has rebounded from a six-year low in March amid speculation a cut in the number of U.S. drilling rigs would curb output. Prices are poised to falter because of a surplus of crude, Goldman Sachs Group Inc. said this week, as U.S. stockpiles remain near the highest level in 85 years and 100 million barrels above the five-year average for this time of year.
“Seasonal demand means that U.S. inventories are starting to decline,” Giovanni Staunovo, an analyst at UBS Group AG in Zurich, said by phone. “We foresee the market rebalancing in the second half of the year, but until then there is a risk that prices could fall from current levels.”
West Texas Intermediate for July delivery dropped 35 cents to $60.37 a barrel in electronic trading on the New York Mercantile Exchange at 10:43 a.m. London time. The volume of all futures traded was about 57 percent below the 100-day average for the time of day. Prices have risen 13 percent this year.
U.S. Supplies
Brent for July settlement slid 53 cents to $66.01 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $5.64 to WTI.
Crude stockpiles in the U.S., the world’s biggest oil user, shrank by 2.67 million barrels to 482.2 million through May 15, according to the Energy Information Administration. Supplies remain near the highest level since 1930, based on monthly records dating back to 1920.
Output fell by 112,000 barrels a day to 9.262 million a day because of a drop in production from Alaska, the EIA reported May 20. U.S. drillers have reduced the number of active rigs by 58 percent since December after prices slumped last year, according to data from Baker Hughes Inc.
WTI will probably extend price gains next week, according to a Bloomberg survey of analysts.
Saudi Arabia, the biggest member of the Organization of Petroleum Exporting Countries, shaped a strategy of defending market share when it met in November, arguing that the usual response of cutting output to boost prices would not address the threat from shale and other higher-cost suppliers.
All but one of the 34 analysts and traders in a separate Bloomberg survey said OPEC will maintain its daily quota of 30 million barrels when it meets in Vienna on June 5. The 12-member group supplies about 40 percent of the world’s oil.
