Oil prices, on Wednesday, August 9, surged further above $52 a barrel ahead of a U.S. inventory report expected to show crude stocks dropped for a sixth week, although gains were capped by doubts about compliance with OPEC-led supply cuts.
Crude inventories last week fell by 7.8 million barrels, more than expected, but gasoline stocks rose unexpectedly, data from the American Petroleum Institute (API) showed on Tuesday before the release of Wednesday’s official numbers.
Brent crude LCOc1, the global benchmark, was up 34 cents at $52.48 at 1159 GMT, after two days of decline. U.S. West Texas Intermediate (WTI) crude CLc1 added 30 cents to $49.47.
Wednesday’s focus will be on the U.S. government report at 1430 GMT to see whether it confirms the figures from the API, an industry group. Analysts expect crude stocks to have fallen by 2.7 million barrels and gasoline by 1.5 million barrels.
“They are also likely to show a significant inventory reduction due to lower imports,” Commerzbank’s Carsten Fritsch said of the Energy Information Administration report.
“It seems to be toppish and prices are struggling to rise on bullish news,” he added. A further drop in U.S. crude stocks would raise hopes that an OPEC-led effort to wipe out a three-year, price-sapping supply glut is working.
The Organization of the Petroleum Exporting Countries, Russia and other producers are cutting output by about 1.8 million barrels per day (bpd) from Jan. 1, 2017 until March 2018.
The deal has supported prices but an output recovery in Libya and Nigeria, OPEC members exempt from the cut, has complicated the effort. U.S. shale oil drillers have also ramped up production.
OPEC officials met on Monday and Tuesday in Abu Dhabi in an effort to boost producers’ adherence to the supply cuts, which has been high on average despite relatively low compliance by Iraq and the United Arab Emirates.
In a statement after the meeting, OPEC said the conclusions reached would help boost compliance. Still, it gave little detail and some analysts remained skeptical.