Oil Extends Gains As API Report Shows That U.S. Stockpile Drops

Oil Extends Gains As API Report Shows That U.S. Stockpile Drops

NEW YORK (Bloomberg) -- Oil extended its advance as industry data showed that U.S. crude stockpiles declined last week, trimming an inventory overhang.

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February futures rose as much as 0.9% in New York after climbing 0.5% on Tuesday. Crude inventories dropped by 4.15 MMbbl, the American Petroleum Institute was said to report. That compares with a forecast 2.5-MMbbl decrease expected in Wednesday’s Energy Information Administration report. Libya reopened two of its biggest oil fields and is set to load the first crude cargo in two years from its largest export terminal.

Oil has traded near $50/bbl since the Organization of Petroleum Exporting Countries agreed Nov. 30 to cut output for the first time in eight years. Non-OPEC producers including Russia will also trim supply. U.S. crude inventories, at the highest seasonal level since the EIA began compiling weekly data in 1982, are projected to decrease for a fifth week.

"The API statistics can be taken as a positive," said Olivier Jakob, managing director of Zug, Switzerland-based consultants Petromatrix GmbH." When we return to a full market in early January, if Libya is indeed back, we expect that it will start to weigh on speculative sentiment."

West Texas Intermediate for February delivery gained as much as 49 cents to $53.79/bbl on the New York Mercantile Exchange and was at $53.54 at 10:13 a.m. in London. The January contract expired Tuesday after adding 11 cents to $52.23. Total volume traded was about 40% below the 100-day average.

U.S. Stockpiles

Brent for February settlement rose as much as 52 cents, or 0.9%, to $55.87/bbl on the London-based ICE Futures Europe exchange. The contract climbed 43 cents to $55.35 on Tuesday. The global benchmark crude traded at a premium of $2.06 to WTI.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, increased by 609,000 bbl last week, the API reported Tuesday, according to a person familiar with the data.