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October 06, 2016 at 07:31 AM
Futures rose as much as 1.4 percent. U.S. crude stockpiles shrank below 500 million barrels last week for the first time since January, government data show. OPEC pledged in Algiers on Sept. 28 to reduce the group’s output to 32.5 million to 33 million barrels a day in a bid to shrink the world’s bloated oil supplies and boost prices. The market is set to remain oversupplied in 2017 and prices will stall at $55 a barrel as shale drillers get back to work, Goldman Sachs Group Inc.’s Head of Commodities Research Jeff Currie said.
“Crude inventories dropped by more than 25 million barrels in September,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $5.2 billion. “You should see prices rally after such a big number.”
Oil has advanced about 12 percent since the Organization of Petroleum Exporting Countries agreed to the first production cut in eight years. Some analysts have expressed doubt that individual output quotas — to be determined at an official meeting of the group in Vienna on Nov. 30 — will be sufficient to erode the market surplus as several countries boost production to restore disrupted supplies.
Stockpiles Drop
West Texas Intermediate for November delivery rose 30 cents, or 0.6 percent, to $50.13 a barrel at 10:38 a.m. on the New York Mercantile Exchange. Prices reached $50.51, the highest since June 22. Total volume traded was about 25 percent above the 100-day average.
Brent for December settlement rose 42 cents, or 0.8 percent, to $52.28 a barrel on the London-based ICE Futures Europe exchange. The contract touched $52.65, the highest since June 9. The global benchmark crude traded at a $1.59 premium to WTI for December delivery.
U.S. crude stockpiles dropped by 2.98 million barrels for a fifth weekly decline, the Energy Information Administration reported Wednesday. A Bloomberg survey had forecast a supply gain. Crude production declined for a second week to 8.5 million barrels a day.
