Oil prices regained some ground on Thursday in anticipation of further falls in U.S. crude stocks, which may signal that production cuts are affecting hefty global inventories.
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Brent crude, the global oil benchmark, rose 1.1% to $51.30 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.3% at $48.93 a barrel.
The U.S. Energy Information Administration is due to publish official data on U.S. stocks, seen as a bellwether for global stocks, later Thursday. The American Petroleum Institute said Wednesday that U.S. crude inventories fell 8.7 million barrels last week.
"Other than the API data, the market has little reason to be cheerful" at present, said Gao Jian, an energy analyst at Shandong-based SCI International.
Oil prices tumbled more than 3% on Wednesday with investors seeing production cuts by the Organization of the Petroleum Exporting Countries and other major producers offset by rises in Libya and Nigeria, OPEC members who are exempt from the reductions. The U.S. is also expected to add over 0.4 million barrels a day of production in 2017, according to the EIA.
Even though OPEC and major non-cartel heavyweights such as Russia last week extended current production cuts, it remains to be seen if such caps can effectively chip away the glut of oil that has haunted prices for more than two years.
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"Rising OPEC oil output fuels doubts about the supply deal's effectiveness and continue to weigh on prices," said Norbert Rücker, head of commodity research at Julius Baer.
Libya has recently increased its output to three-year highs. Growth from a smaller producer injecting "such a significant drag to oil prices suggests that market watchers remain extremely wary over any potential supply-glut widening," said Barnabas Gan, an OCBC economist.
The trend among U.S. producers suggests forecasts for production growth should be raised because of an expected acceleration in the second half of this year, said consultancy Energy Aspects. It estimated that large operators such as Anadarko Petroleum Corp. and Marathon Oil Corp. are expected to increase output by 400,000 barrels a day, with smaller independent producers projected to add a further 100,000 barrels a day.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--rose 1.2% to $1.62 a gallon. ICE gasoil changed hands at $453.75 a metric ton, up $8.25 from the previous settlement.
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(END) Dow Jones Newswires
June 01, 2017 06:36 ET (10:36 GMT)