Oil futures higher on production cut hopes as inventory build limits gains

By Jessica Resnick-Ault NEW YORK (Reuters) - Crude prices edged up on Wednesday, buoyed by hopes that OPEC and its allies will strike a production cut agreement, but surging U.S. crude inventories muted the gains.

Reuters April 09, 2020 00:06:10 IST
Oil futures higher on production cut hopes as inventory build limits gains

Oil futures higher on production cut hopes as inventory build limits gains

By Jessica Resnick-Ault

NEW YORK (Reuters) - Crude prices edged up on Wednesday, buoyed by hopes that OPEC and its allies will strike a production cut agreement, but surging U.S. crude inventories muted the gains.

Thursday's videoconference meeting between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia was expected to be more successful than their gathering in March, which ended in a failure to extend supply cuts and a price war between Saudi Arabia and Russia.

"The coming extraordinary producing-countries meeting is the only hope on the horizon for the market," said Bjornar Tonhaugen of Rystad Energy.

"Nobody wants to go short ahead of what could be a 'positive surprise' by OPEC++."

Brent crude was up 32 cents, or 1%, at $32.19 by 12:46 p.m. EDT (1646 GMT). U.S. West Texas Intermediate (WTI) crude rose 45 cents to $24.08 a barrel, after trading as high as $25.29 a barrel.

Both contracts pared gains after the United States posted its largest crude inventory surge on record, with Brent turning negative briefly.

U.S. crude inventories rose 15.2 million barrels in the week, as refiners slashed runs and the storage hub at Cushing filled more quickly than expected, the U.S. Energy Information Administration said in a weekly report on Wednesday.

Demand has fallen as the coronavirus outbreak forced closures of businesses and schools.

"There are multiple bad angles: Refining utilization. Crude stockpiles. Cushing is crazy - that's a gigantic number," said Bob Yawger, director of energy futures at Mizuho in New York. The Cushing, Oklahoma, storage hub, which serves as the delivery point for the New York Mercantile Exchange U.S. oil futures contract, is on pace to be full in three weeks if this week's gain is repeated, Yawger said.

Crude has collapsed in 2020 because of a slide in demand due to the coronavirus outbreak and excess supply. Brent dropped to $21.65, its lowest since 2002, on March 30.

While OPEC sources have said a deal to cut production is conditional on the participation of the United States, doubts remain as to whether Washington will contribute.

The U.S. Department of Energy said on Tuesday U.S. output was already declining, without government action.

(Additional reporting by Alex Lawler and Jane Chung; editing by Jan Harvey, Jason Neely, Tom Brown and David Gregorio)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.