Oil holds near seven-week high
Tokyo — Oil prices held near multiweek highs on Wednesday after oil cartel Opec signalled optimism over its deal with other producers to curb output to clear a glut that has weighed on markets since 2014.
The US West Texas Intermediate (WTI) April crude contract, the new front-month future, was up 16c, or 0.3%, at $54.49 a barrel at 5.52am GMT. On Tuesday, the March contract expired up 1.2% after reaching its highest since January 3. Brent crude was up 23c, or 0.4%, at $56.89, having touched its highest since February 2 at $57.31 in the previous session.
"We are nearing the top of the trading range for West Texas and Brent and so the next couple of sessions will be crucial from a technical point of view, at least in determining which way we break," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
"The DoE [department of energy] data tomorrow will be where we get our next impetus," he said, referring to the US department’s official weekly numbers on crude and petroleum product stockpiles.
The data is set to be released on Thursday, a day later than normal, following a US public holiday on Monday.
Last week’s numbers showed US output helped boost crude and petrol inventories to record highs, amid faltering demand growth for the motor fuel.
That has kept a lid on prices after they climbed following an agreement by Opec and other producers to cut output by about 1.8-million barrels a day.
Mohammad Barkindo, Opec secretary-general, told an industry conference in London on Tuesday that January data showed conformity from member countries participating in the output cut had been above 90%. Oil inventories would decline further this year, he added.
Goldman Sachs, however, noted that a rebound in US drilling activity had exceeded even its own above-consensus expectations.
"While the reduction in supplies out of core Opec in the Gulf and Russia has exceeded our and consensus expectations, the market is starting to doubt that this will be sufficient to translate into large oil inventory draws by 2Q17," it said in a research note.