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London - Oil climbed to a two-week high as output curbs by OPEC and its allies continued to deplete the remnants of a global supply surplus.
Futures in New York rose as much as 2%. OPEC and its partners, which are cutting output to ease the global glut, still expect markets to balance by about the third quarter, according to people familiar with the matter. Speculation is also growing that US President Donald Trump may deploy sanctions against Iran and Venezuela that will curb oil output, according to PVM Oil Associates.
Oil has swung around this month after registering its worst February decline in half a decade. While the Organisation of Petroleum Exporting Countries is showing confidence it will eradicate the global glut this year, record US production and rising American stockpiles have prompted speculation the cartel will have to extend its supply curbs into 2019 to reach the goal of reducing inventories to the five-year average.
“The oil market is in reasonably good health,” said Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen. “Oil is settling into a wide range between $60 and $70. Storm clouds could emerge if global demand growth begins to be called into question.”
West Texas Intermediate for April delivery, which expires Tuesday, climbed as much as $1.24 to $63.30 a barrel on the New York Mercantile Exchange, the highest intraday level since February 28. The contract was at $63.21 as of 9:30 am local time, with total volumes traded in line with the 100-day average. The more-active May futures rose $1.17 to $63.30.
Brent for May settlement gained $1.27 to $67.32 on the London-based ICE Futures Europe exchange, after slipping 0.2% on Monday. The global benchmark crude traded at a $3.96 premium to WTI for the same month.
High compliance
OPEC and its partners are said to have complied with pledged curbs at a record rate of 138% in February. Compliance among the so-called OPEC-12 was 142%, while it was 130% for those outside the group, one person said, asking not to be named because the figures aren’t public.
US crude inventories are at their highest since December, and probably grew expanded again last week, according to a Bloomberg survey before government data due on Wednesday. While stockpiles are forecast to have added 3.2 million barrels, the expected increase is smaller than the 5 million-barrel gain a week earlier.
Other oil-market news:
• Saudi Arabia’s exports of diesel and gasoline soared to a record in January, underscoring its advantage over other producers who’re more dependent on shipments of lower-value crude.
• While US shale companies are pumping record amounts of oil, the growth rate is flattening out for one closely watched category: drilled-but-uncompleted wells.
• Bearish options bets on the WTI curve are near the lowest in more than four years, according to the latest CFTC data, despite the prompt WTI spread flipping to contango.
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