U.S. oil ends at 3-month high as supplies tighten; Brent snaps 5-day winning streak
Crude-oil futures ended on a mixed note Tuesday, with international benchmark Brent crude slightly lower after posting gains in each of the last five sessions while the U.S. benchmark climbed to its highest finish in three months amid reports of falling Saudi Arabian exports.
Traders also eyed talks between the U.S. and China for signs of progress on trade that could ease worries about energy demand and boost crude prices.
March West Texas Intermediate crude oil CLH9, -0.11% gained 50 cents, or 0.9%, to settle at $56.09 a barrel on the New York Mercantile Exchange — the highest finish for a front-month contract since Nov. 19, according to Dow Jones Market Data. The March contract expires at Wednesday’s settlement.
April Brent LCOJ9, -0.11% lost a nickel, or less than 0.1%, to settle at $66.45 a barrel on the ICE Futures Europe exchange after gains in each of the last five sessions.
On Monday, Brent crude saw a modest rise, but there was no settlement for Nymex WTI oil as U.S. markets were closed in observance of Presidents Day holiday. Last week, WTI prices posted a 5.4% weekly gain while Brent soared 6.7% over the same period.
Market participants pointed to bullish output reductions led by the Organization of the Petroleum Exporting Countries and its allies as helping to foster recent gains in crude.
“Saudi Arabia’s production cuts by more than the required level also serve to offset the lack of compliance by countries like Iraq,” said analysts at Commerzbank in a daily note. The cartel’s joint ministerial monitoring committee, or JMMC, which monitors OPEC members’ conformity levels to the cuts agreement, is due to meet in Azerbaijan on March 18.
Crude-oil volumes shipped from major producer Saudi Arabia fell in the first half of February to 6.2 million barrels a day, down 1.3 million barrels a day on the previous month, according to data published by ship tracking firm Kpler on Monday.
The data confirmed comments from the Kingdom’s oil minister who said earlier this month that the country would further cut output. Data from Kpler showed fewer shipments destined for the U.S., India, Thailand and South Korea in particular. “There is also evidence that Saudi Arabia has increased refinery throughput so far through February,” said Kpler, adding that departures of oil products have spiked to 1.56 million barrels a day, up 0.19 million barrels in the month.
Markets also were supported by the resumption of trade negotiations between the U.S. and China 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. “In the short run it’s macro driven and strongly linked to developments in equities,” said Michael Poulsen, analyst at consulting firm Global Risk Management, referring to oil prices.
Meanwhile, 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.
Separately, the EIA will release its 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.
Back on Nymex Tuesday, March gasoline RBH9, -0.02% shed 0.6% to $1.564 a gallon and March heating oil HOH9, +0.02% fell 1.3% to $1.995 a gallon. March natural gas NGH19, -0.30% settled at $2.662 per million British thermal units, up 1.4%.