Oil extended an advance after a U.S. industry report signaled a bigger-than-expected draw in nationwide crude inventories and as trade tensions eased between the world’s largest economies.
Futures in New York added as much as 2.2% after climbing 1.3% on Dec. 11. U.S. stockpiles fell by more than 10 million barrels last week, the industry-funded American Petroleum Institute was said to report before government data that’s forecast to show a smaller drop Dec. 12. Meanwhile, trade tensions receded as China moved to lower duties on U.S. vehicle imports.
Crude remains in a bear market after slumping from a four-year high in early October, even though OPEC and its allies have pledged substantial output cuts to check a growing surplus. Traders remain concerned that record American production will continue to flood world markets, and skeptical that all the countries in the OPEC+ coalition will scale back supplies as promised.
“The oil market is regaining further ground this morning in the wake of a bullish API report concerning U.S. oil stockpiles,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.
West Texas Intermediate for January delivery gained as much as $1.15 to $52.80 a barrel on the New York Mercantile Exchange, and traded at $52.60 as of 8:36 a.m. local time. Prices increased 65 cents to $51.65 on Dec. 11, after posting a 3.1% drop in the previous session. Total volume traded Dec. 12 was 14% above the 100-day average.
Brent for February settlement rose 92 cents to $61.12 a barrel on London’s ICE Futures Europe exchange, after adding 0.4% on Dec. 11. The global benchmark crude traded at an $8.33-a-barrel premium to WTI for the same month.
In the United States, nationwide inventories declined by 10.2 million barrels in the week ended Dec. 7, the API was said to report. If that’s confirmed by Energy Information Administration data Dec. 12, it would be a second weekly drop and the biggest decrease since July. Still, stockpiles at the storage hub of Cushing, Okla., gained 642,000 barrels last week, according to API.
American refiners have been ramping up production since last month, with crude-processing rates rising to record levels after the seasonal maintenance period. As oil-product exports from the United States jumped to a fresh record, refineries operated at 95.6% of capacity in the week ended Nov. 23, the highest ever for this time of year.
Meanwhile, stocks rallied globally on signs of a positive outlook for trade talks. China took a step forward in easing steep tariffs by submitting a proposal to eliminate the 25% surcharge slapped on U.S.-made cars.
A Canadian court granted bail to the chief financial officer of Chinese tech-giant Huawei Technologies Co., allowing the executive to stay in her Vancouver, British Columbia, home as she awaits a possible extradition to the United States over fraud charges.
In Other News
OPEC data showed that it may need to cut even deeper than it agreed in the second half of next year to prevent a surplus. The U.S. government left its forecast for domestic crude production unchanged for 2019 even with prices averaging almost $11 a barrel lower than its previous estimate. Alberta’s plan to boost crude prices through mandatory production cuts is working a little too well, and the price of heavy Canadian crude has more than doubled. Gasoline futures in New York increased for a second day to $1.4649 a gallon after rising 1.5% on Dec. 11.