Oil Holds Longest Run of Gains in Over a Year as U.S. Glut Eases

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Oil held its advance after the longest run of gains in more than a year as U.S. crude and gasoline stockpiles declined, easing an overhang of supplies that are at the highest seasonal level in at least two decades.

Futures were little changed in New York after advancing more than 12 percent over the previous five sessions. Crude inventories fell the most in five weeks, while motor fuel stockpiles slid for a third week, according to a report from the Energy Information Administration. OPEC is on course to agree to an output-freeze deal because its biggest members are already pumping flat-out, Chakib Khelil, the group’s former president, said in a Bloomberg interview.

Oil has climbed about 18 percent since closing below $40 a barrel and slipping into a bear market earlier this month. Russian Energy Minister Alexander Novak said that the nation was open to discussing a freeze after Saudi Arabian Energy Minister Khalid Al-Falih said informal talks next month may lead to action to stabilize the market. A deal to cap production was proposed in February but a meeting in April ended with no accord.

“The decline in crude inventories and the much bigger drop in gasoline stockpiles is clearly a positive,” said Angus Nicholson, a market analyst in Melbourne at IG Ltd. “There has been a lot of momentum in the oil price, fueled by some jawboning with regards to the possibility of a supply freeze deal. Any pullback in the price won’t be too dramatic. $45 is a key level and should see some support.”

West Texas Intermediate for September delivery was at $46.81 a barrel on the New York Mercantile Exchange, up 2 cents, at 2:04 p.m. in Hong Kong. The contract rose 21 cents to close at $46.79 on Wednesday for a fifth day of gains, the longest run since April 2015. Total volume traded was about 18 percent below the 100-day average.

U.S. Stockpiles

Brent for October settlement was 13 cents lower at $49.72 a barrel on the London-based ICE Futures Europe exchange. The contract closed at $49.85 on Wednesday, 19 percent higher than its August low and near the 20 percent threshold for a bull market. The global benchmark crude traded at a $2.24 premium to WTI for October delivery.

For a chart on Brent’s premium widening to the U.S. benchmark, click here.

U.S. crude stockpiles dropped by 2.5 million barrels last week to 521.1 million barrels, the EIA reported Wednesday. That compares with the median forecast in a Bloomberg survey for a 950,000 barrel increase. Gasoline inventories declined by 2.7 million barrels to 232.7 million barrels.

Oil-market news:

  • U.S. crude output rose by 152,000 barrels a day, in part because of an adjustment to address disparities between weekly and monthly data, according to the EIA’s website.
  • An agreement to freeze output can now be reached as Saudi Arabia, Iran and non-OPEC member Russia are producing at, or close to, maximum capacity, Khelil said in a Bloomberg television interview.

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