Investing.com – West Texas Intermediate oil continued to hold onto gains in North American trade on Thursday, after data showed that oil supplies in the U.S. registered a much lower-than-expected inventory build.
Crude oil for April delivery on the New York Mercantile Exchange gained 115 cents, or 2.15%, to trade at $54.75 a barrel by 11:04AM ET (16:04GMT) compared to $54.71 ahead of the report.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 0.564 million barrels in the week ended February 17. Market analysts' had expected a crude-stock build of 3.475 million barrels, though the American Petroleum Institute late Wednesday reported a supply draw of 0.884 million barrels.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 1.528 million barrels last week, the EIA said. Total U.S. crude oil inventories stood at 518.7 million barrels as of last week, according to press release, which the EIA considered to be “near the upper limit of the average range for this time of year”.
The report also showed that gasoline inventories decreased by 2.628 million barrels, compared to expectations for a draw of 0.888 million barrels, while distillate stockpiles fell by 4.924 million barrels, compared to forecasts for a decline of 0.483 million.
The report came out one day later than usual due to Monday's Washington’s Birthday holiday.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for April delivery traded up 96 cents, or 1.72%, to $56.80 by 11:09AM ET (16:09GMT), compared to $57.05 before the release.
Meanwhile, Brent's premium to the WTI crude contract stood at $2.28 a barrel by 11:10AM ET (16:10GMT), compared to a gap of $2.25 by close of trade on Wednesday.
Futures have been trading in a narrow range around the lower-to-mid-$50s over the past month as sentiment in oil markets has been torn between hopes that oversupply may be curbed by output cuts announced by major global producers and expectations of a rebound in U.S. shale production.
U.S. drilling activity has risen by almost 7% since mid-2016, taking it back to levels seen in late 2014, when strong U.S. crude output contributed to a collapse in oil prices.
The revival in U.S. drilling has raised concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.
OPEC and non-OPEC countries have made a strong start to lowering their oil output under the first such pact in more than a decade as global producers look to reduce oversupply and support prices.
Latest data showed the group’s production in January declined by 890,000 barrels a day from the previous month to 32.14 million barrels a day. The drop indicates a 90% compliance level so far by producers who had agreed to curtail their output.
The OPEC technical committee two-day meeting finished on Wednesday with the Qatar energy minister stating that findings on compliance were “encouraging”.
The next monitoring meeting is tentatively scheduled for March 22 and 23 in Kuwait.
January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day to 32.5 million through the end of June.
Though several OPEC energy ministers have commented that the deal could be extended beyond the current deadline, most have stated that it is far too early to reach a decision on whether that will be necessary.
OPEC’s next official meeting is currently scheduled for May 25 in Vienna.