Crude climbed the most since December as a recent buildup in U.S. storage tanks and terminals appears to be slowing down.
Futures gained 2.4 percent in New York on Wednesday after a government report showed American oil inventories rose by 1.84 million barrels last week. That was lower than all but two of 11 estimates in a Bloomberg survey, and was also less of an increase than in the previous two weeks. At the nation’s biggest pipeline hub, stockpiles have fallen for eight straight weeks.
“It shows a pretty healthy balance in the market,” said Matt Sallee, who helps manage $16 billion in oil-related assets at Tortoise Capital Advisors LLC. “The fact that we only built 1.8 million would indicate a fairly tight market.”
Typically, U.S. crude stockpiles accrue at this time of year as refiners perform maintenance that takes key equipment offline, depressing demand for oil.
Also helping improve the mood after oil lost almost 9 percent this month through Tuesday were bullish statements from the Organization of Petroleum Exporting Countries.
OPEC Secretary General Mohammad Barkindo said at a conference in Riyadh that oil supplies are on the road to coming back into balance with demand. Saudi Arabian Oil Minister Khalid Al-Falih said the volatility in the market is “unfortunate” and that OPEC and its partners are trying to stabilize the market.
Although crude stockpiles rose, the build “was lower than market expectations and so fairly bullish,” said Adam Wise, who oversees an $8 billion energy portfolio at John Hancock Financial Services Inc. in Boston. “The market was looking for confirmatory evidence that U.S. production growth is causing an oversupply situation. But, today’s lower-than-anticipated build is more supportive than negative.”
West Texas Intermediate for March delivery added $1.41 to settle at $60.60 a barrel on the New York Mercantile Exchange. Total volume traded was about 35 percent above the 100-day average.
Brent for April settlement edged higher by $1.64 to end the session at $64.36 on the London-based ICE Futures Europe exchange and traded at a $3.85 premium to WTI for the same month.
Stockpiles at the Cushing, Oklahoma, pipeline and storage nexus declined by 3.64 million barrels last week, the steepest drop since Jan. 12, the EIA report showed.
Gasoline inventories climbed by 3.6 million barrels, while distillate stockpiles fell by 459,000 barrels. Crude production reached a new record 10.27 million barrels a day. Additionally, cargoes of foreign crude landing at East Coast ports fell to the lowest since July, the report showed.
Other oil-market news:
Gasoline futures rose 1.6 percent to settle at $1.7130 a gallon, the biggest gain since January.
OPEC will soon discuss with Russia a new way to measure oil inventories as producers meet to review their supply-cut agreement that expires at the end of 2018.
Russian banks and a joint Russia-China investment fund are eager to participate in Saudi Aramco’s initial public offering, according to the head of a sovereign Russian investment fund.