Oil futures got some respite in Asia on Wednesday after an industry group said U.S. crude supplies fell by nearly 6 million barrels last week.
The American Petroleum Institute, however, estimated gasoline stockpiles increased again--coming at a time that inventory levels are already unusually high for this time of the year. Official data from the Energy Information Administration will be released later Wednesday.
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But analysts say the price rebound is likely to be shortlived as on Tuesday the EIA boosted its U.S. oil-production forecasts, including 2018's average now seen being just shy of 10 million barrels a day. Output has only gotten back above 9 million the past several months, and this year's average is now seen being 9.3 million. Meanwhile, the EIA now sees depressed oil prices at least through next year, citing new oil flowing out of Canada and Brazil set to inundate an already-oversupplied market.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in June recently traded up 0.6% at $46.17 a barrel in the Globex electronic session. July Brent crude on London's ICE Futures exchange rose 0.6% to $49. Both contracts settled down 1.2% on Tuesday.
While the API and EIA have had the spotlight in recent hours, the market's primary focus remains the Organization of the Petroleum Exporting Countries and what it might do to counter the anticipated gusher of new oil. The general expectation is the cartel and Russia will roll current production cuts into the second half of this year, or possibly into early 2018.
However, production is recovering in Libya and Nigeria. Any sharp increase of output from those two OPEC members, which are exempt from the current output cuts, would add pressure on other OPEC producers to cut even more as the group tries to bring global crude inventories down to five-year averages.
Meanwhile, compliance with the production quotas is another potential landmine that imperils the deal's success. OPEC producers have betrayed their allotted quotas in the past by producing more than they reported; OPEC's next monthly report will be published Thursday.
Possibly also helping sentiment in Asian trading on Wednesday is a Reuters report that Saudi Arabia, which has taken on the lion share of the cuts, is planning to reduce oil exports to the region by about 7 million barrels in June. That as crude imports by China were set to potientially ease the next two months as refineries undergo maintenance, said consultancy FGE.
Still, some investors are finding comfort in the still-robust demand from Asia, in particular China and India, said Stuart Ive, a client manager at OM Financial.
For this year, China's crude imports are widely expected to register another double-digit increase--hitting fresh record highs--though the gain is seen being less than 2016's 14% jump. And while dubbing India the "bright spot" for global fuel-consumption growth, BMI Research projects India's fuel demand will rise 7.8% this year.
Nymex reformulated gasoline blendstock for June was recently down 0.2% at $1.4859 a gallon while June diesel rose 0.3% to $1.4460 and ICE gasoil for May was flattish at $434 a metric ton.
Write to Jenny W. Hsu at firstname.lastname@example.org
Corrections & Amplifications
This item was corrected on May 9, 2017 at 11:03 p.m. ET to reflect that Stuart Ive, not Stuart Ives, is a client manager at OM Financial.
Stuart Ive is a client manager at OM Financial. "Oil Rebounds Some in Asia on Oil-Supply Reading," published at 0242 GMT, incorrectly spelled the last name as Ives.
(END) Dow Jones Newswires
May 09, 2017 23:02 ET (03:02 GMT)