Crude climbs on renewed production hopes, inventory data

London (Mar 16)  Oil prices rose on Wednesday following reports major producers will meet next month to discuss output limits and industry data indicated a smaller-than-expected increase in U.S. crude inventories.

The Qatari oil ministry said members of the Organization of the Petroleum Exporting Countries will meet with Russian energy officials and other oil producers in April to hash out an agreement to limit output. Prices have rallied in recent weeks on hopes that such production limits will help alleviate the global glut of crude.

Brent crude LCOM6, +1.85% the global benchmark, rose 1.3% to $39.23 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLJ6, +2.04%  were trading up 1.8% at $36.97 a barrel.

Prices also received support from data released late Tuesday by the American Petroleum Institute, an industry group, that showed a 1.5-million-barrel increase in U.S. crude stockpiles last week. The U.S. Energy Information Administration will publish the official data later on Wednesday and analysts surveyed by The Wall Street Journal expect crude stockpiles to have risen by 3.3 million barrels.

On Wednesday, the Qatari oil ministry said the preliminary agreement last month between OPEC and non-OPEC producers to limit their oil production to January levels has “put a floor under the oil price.” In recent weeks, Brent crude has rallied to around $40 a barrel, up from decade lows of less than $28 a barrel in January.

The next meeting to discuss output limits is to be held on April 17 in Doha, Qatar, which holds the rotating presidency of OPEC this year and has been coordinating the effort.

Traders will also look to the U.S. production figures, to be released later on Wednesday. Output has stagnated in recent weeks around 9.1 million barrels a day, down from a peak of 9.7 million last April.

“We may see some strength for prices coming from possible U.S. production declines,” wrote Daniel Ang, an investment analyst at Phillip Futures, but he added, “Based on fundamentals we expect prices to be moving downwards by the end of the week even if prices do increase today.”

Nymex reformulated gasoline blendstock for April RBJ6, +0.58% — the benchmark gasoline contract — rose 0.1% to $1.41 a gallon. ICE gasoil changed hands at $355.25 a metric ton, up $5.25 from the previous settlement.

Source: Reuters