Oil marks highest finish since November on Wednesday, with U.S. prices up 6 sessions in a row
Myra P. Saefong / MarketWatch
Petroleumworld 02 20 2019
Oil futures marked their highest finish in three months on Wednesday, with U.S. benchmark prices extending their streak of gains to a sixth consecutive session, as signs of tighter global crude supplies outweigh pressure from a continued rise in U.S. production.
The market saw “two supply headwinds unfold in tandem,” said Peter Hanks, junior analyst at DailyFX . Nigerian President Muhammadu Buhari is reportedly considering cutting crude output in pursuit of higher prices, he said, adding that such a “decision would signal a conscious effort by an OPEC member to supplement recent crude production cuts” by the Organization of the Petroleum Exporting Countries.
In addition, Saudi Aramco said it would temporarily close its 400,000 barrel-per-day Yanbu refinery for maintenance, said Hanks.
March WTI crude oil CLH9, +1.44% tacked on 83 cents, or 1.5%, to settle at $56.92 a barrel. That was the highest finish for a front-month contract since Nov. 12, according to Dow Jones Market Data. The March contract expired at Wednesday's settlement. The new front-month contract, April WTI CLJ9, +0.09% settled at $57.16, up 71 cents, or 1.3%.
April Brent LCOJ9, +1.10% rose 63 cents, or about 1%, to $67.08 a barrel on the ICE Futures Europe, after trading as low as $65.63. It fell Tuesday, snapping a five-day winning streak.
Read: Is there a ‘Saudi put' on oil prices? Here's one analyst's argument
Prices had already found support from growing optimism that the U.S. and China could strike a trade deal, as well as evidence of shrinking global supply because of OPEC-led production cuts.
Trade negotiations between the U.S. and China resumed this week in Washington. President Donald Trump is hoping to strike a deal ahead of the March 1 deadline when additional tariffs on Chinese goods are due to be implemented. With investors fretting over what no deal would mean for future macroeconomic growth, oil has been more correlated with equities in recent weeks.
Trump has even said the March 1 date may be flexible, an update that helped send U.S. stocks higher , supporting risk-on markets in general.
“Longer-term, the market continues to look for more solid footing in terms of demand growth prospects, with a continuation of weaker economic data out of Europe confronting some cautious optimism surrounding U.S.-China trade talks,” said Robbie Fraser, global commodity analyst at Schneider Electric.
Meanwhile, the supply side of the market continues to focus on output cuts by OPEC and its allies “and continued growth for U.S. shale production, which has stalled a bit of late after a strong start to the year,” he said.
The U.S. Energy Information Administration said in monthly report Tuesday that it expects oil production from seven major U.S. shale plays to climb by 84,000 barrels a day in March to 8.398 million barrels a day.
The EIA will release its separate, weekly petroleum status report at 11 a.m. Eastern Time Thursday, a day later than usual due to the Presidents Day holiday earlier in the week. A similar report from trade group the American Petroleum Institute will come out late Wednesday.
Analysts expect the EIA to report an increase of 3.5 million barrels in crude stockpiles for the week ended Feb. 15, according to a survey conducted by S&P Global Platts. They also forecast supply declines of 1.1 million barrels for gasoline and 1.4 million barrels for distillates, which include heating oil.
On Nymex, March gasoline RBH9, -0.01% added 2.2% to $1.598 a gallon and March heating oil HOH9, -0.05% rose 1.2% to $2.018 a gallon. March natural gas NGH19, +0.38% ended at $2.636 per million British thermal units, down 1%.
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Story by Myra P. Saefong from MarketWatch.
marketwatch.com 02 20 2019 20:36 GMT
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