Oil Rises Ahead of U.S. Stockpiles Data

By Alison Sider and Sarah McFarlane Features Dow Jones Newswires

Oil prices ended higher Tuesday ahead of data on U.S. oil stockpiles due to be released Wednesday.

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U.S. crude futures rose 38 cents, or 0.82%, to $46.46 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 43 cents, or 0.89%, to $48.72 on ICE Futures Europe.

Last week oil prices fell sharply after the U.S. Energy Information Administration reported that U.S. stockpiles rose for the first time in nine weeks -- taking the market by surprise.

Investors are betting that last week's increase was a one-off, and that Wednesday's data will show that inventories fell. Analysts surveyed by The Wall Street Journal are anticipating a 2.6- million-barrel decline.

"We started seeing the buying come in off of expectation of stock draws, " said Ric Navy, senior vice president for energy futures at RJ O'Brien & Associates LLC.

The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 2.8-million-barrel increase in crude supplies, a 1.8-million-barrel rise in gasoline stocks and a 1.5-million-barrel decrease in distillate inventories, according to a market participant.

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Oil traded lower in the day after the Organization of the Petroleum Exporting Countries said it had produced more crude in May.

OPEC said its output rose 1% to 32.14 million barrels a day in May, led by increases in Libya, Nigeria and Iraq, according to its closely watched monthly report.

The output increases come even as the cartel is trying to convince market participants that its cuts are reducing the size of a glut that has weighed on the market for nearly three years.

"It doesn't sound good by any stretch of the imagination. It's not good to see them adding barrels," said Bob Yawger, director of the Futures Division of Mizuho Securities USA.

OPEC and major non-U. S. producers such as Russia agreed to reduce their production by 1.8 million barrels a day starting in January. Even though the deal was recently extended to next March, investors' faith has faded as analysts say U.S. shale producers have boosted output, slowing OPEC's efforts and keeping the world awash with oil.

Rising production in Nigeria and Libya has been anticipated, as those countries were exempted from the production-reduction pact.

Saudi Arabia, OPEC's biggest producer and the world's biggest exporter, also raised its production slightly in May, according to secondary sources cited by OPEC.

But Saudi Arabia's energy minister said Sunday that he is confident that market rebalancing will soon gather steam. The country is looking to cut its shipments to key markets, including the U.S., where any increase in inventories can prompt a major selloff.

The state-owned Saudi Arabian Oil Co. has been raising prices for U.S. customers and expects exports to the U.S. to fall to a nearly three-decade low in July. Seasonally, Saudi Arabia's exports are lower over the summer when its domestic demand for power peaks.

But some said the move won't change much.

"In itself it's something that was expected, I think it would have had greater impact if it was done three months ago," said Olivier Jakob at Switzerland-based consultancy Petromatrix.

Gasoline futures rose 1.15 cents, or 0.77%, to $1.4995 a gallon. Diesel futures rose 2.23 cents, or 1.56%, to $1.4477 a gallon

Summer Said and Jenny W. Hsu contributed to this article.

Write to Alison Sider at alison.sider@wsj.com and Sarah McFarlane at sarah.mcfarlane@wsj.com

(END) Dow Jones Newswires

June 13, 2017 17:26 ET (21:26 GMT)