Oil prices rose higher on Wednesday. This rise added to the overnight gains after the data indicated that an increase in the U.S. crude supplies less than expected last week. The result of this eased the concerns over a global excess.
The May contract of the U.S. West Texas Intermediate crude, increased by 67 cents, approximately 1.4%, to $49.02 a barrel by 10:35 AM ET (14:35 GMT), after it reached a session peak of $49.12, the highest since March 21.
Prices were at around $48.55 before the release of the inventory data.
The Brent oil set for June delivery on the ICE Futures Exchange in London added 67 cents to $52.09 per barrel. This amount is also a level that had not been seen since March 21.
U.S. Energy Information Administration stated in its weekly report that the crude oil inventories rose by 867,000 barrels in the week ended March 24.
Market analysts’ anticipated a crude-stock gain of 1.4 million barrels. Late Tuesday, the American Petroleum Institute announced a supply increase of 1.9 million barrels.
The supplies at Cushing, Oklahoma, dropped by 220,000 barrels in the last week, according to the EIA. This is the primary delivery point for Nymex crude.
Total U.S. crude oil inventories stood at an all-time high of 534.0 million barrels as of the past week. It is considered by the EIA to be at the top limit of the average range for this period of the year.
The report also indicated that the gasoline inventories dropped by 3.7 million barrels. This result was in comparison to the expectations for a decrease of 1.9 million barrels.
For distillate inventories including diesel, the EIA recorded a decrease of 2.5 million barrels.
Oil has dropped sharply during this month. This drop is amid the concern that the ongoing rebound in U.S. shale production could derail the efforts by other major producers to rebalance the global oil supply and demand.
OPEC – Organization of the Petroleum Exporting Countries
OPEC agreed in November last year to restrict its output by approximately 1.2 million barrels per day between January and June. Russia and ten other non-OPEC producers have agreed to jointly cut the supply by an additional 600,000 barrels per day.
They agreed to reduce the output by 1.8 million barrels per day to 32.5 million barrels. It is set to happen during the first half of the year. However, so far the move has had little impact on the inventory levels.
Bijan Zanganeh, Iranian Oil Minister, told reporters on Tuesday that a global oil cuts deal is likely to be extended. He noted that time is needed to discuss the subject properly first.
A joint committee of ministers from OPEC and non-OPEC oil producers are planning to meet in late April. They will present its proposal on the fate of the pact. The oil cartel will take a final decision on May 25 on whether to extend the deal past June.
In the meanwhile, the armed factions at the western Libyan oil fields of Sharara and Wafa blocked production. The result of this reduced the output by 252,000 barrels per day. This amount is approximately a third of the production, said a source at the National Oil Corporation on Tuesday.