WSJ: Oil Wavers as Traders Assess U.S. Supply Outlook
NEW YORK—Oil prices wavered Monday on concerns about violence in Yemen and uncertainty about U.S. oil production and inventories.
Light, sweet crude for June delivery recently rose 19 cents, or 0.3%, to $57.34 a barrel on the New York Mercantile Exchange, after trading as low as $56.80 earlier in the session. Brent crude, the global benchmark, fell 12 cents, or 0.2%, to $65.13 a barrel on the ICE Futures Europe exchange.
Nymex crude lost 0.3% last week, snapping a five-week winning streak, while Brent gained 2.9% last week and has been up for three consecutive weeks, rising 19%.
Data provider Genscape Inc. told clients Monday that crude-oil supplies in Cushing, Okla., a key storage hub, fell by 195,000 barrels in the week ended Friday, according to two market participants.
Cushing stockpiles are at a record high and near maximum capacity at the hub. If the drop in supplies is confirmed by the U.S. Energy Information Administration on Wednesday, it would mark the first decline in Cushing stocks since November.
A decline in Cushing stocks at this time of year is expected as refineries on the Gulf Coast complete seasonal maintenance and buy more crude. But pipeline outages in West Texas could divert more crude to Cushing in May, said London research firm Energy Aspects, which expects supplies at the hub to rise by 500,000 barrels next month.
The number of rigs drilling for oil in the U.S. fell for a 20th straight week last week, according to oil-field-services firm Baker Hughes Inc., boosting expectations that U.S. production is set to flatten out or decline.
“The market’s resilience right here points to the fact that people are looking forward to the idea that we will see production in North America come down,” said Gene McGillian, senior analyst at Tradition Energy. “The market continues to get a little bit of a wind in its sail from that.”
In addition, Brent crude has been supported by Saudi Arabia’s military action in Yemen. Saudi-led aircraft have bombed targets in Yemen, where Iran-allied militiamen and rebel army units are trying to take control, according to media reports.
Meanwhile, striking workers have shut down an important Libyan oil field in a dispute over wage payments, a Libyan official said Sunday. The field is jointly run by giant Italian energy company Eni SpA and Libya’s National Oil Co.
However, some analysts remain skeptical that the recent rally in oil prices is sustainable, as the market remains oversupplied.
“Sustaining the recent oil price rally requires firmer demand and a tangible supply response. The cart is moving ahead of the horse, and we take a cautious view on further price appreciation over the near term,” Barclays analyst Michael Cohen said in a report.
Gasoline futures recently rose 0.2% to $2.0115 a gallon. Diesel futures fell 0.2% to $1.9250 a gallon.
—Eric Yep and Summer Said contributed to this article.
