Oil eases off one-month high on surprise US crude build

U.S. total oil and product stocks have already been on a declining trend for the past couple of months.

The West Texas Intermediate for May Delivery added 0.19 US dollars to settle at 51.15 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery increased 0.19 dollars to close at 54.36 dollars a barrel on the London ICE Futures Exchange.

Both benchmarks recovered from four-month lows last week on expectations that the Organization of the Petroleum Exporting Countries would manage to tighten supply by cutting production under a deal agreed at the end of a year ago.

Prices for front-month Brent crude futures, the worldwide benchmark for oil, were at $54.40 per barrel at 0345 GMT, up 23 cents, or 0.4 percent, from their last close, according to Reuters.

"Should it confirm that US crude stocks did indeed fall for what would only be the second time this year, it will mark the start of a sustained tightening in USA crude supplies", said Stephen Brennock of oil broker PVM. USA crude settled 12 cents United States, or 0.2 per cent, higher at US$51.15.

Oil also gained after an outage at the 180,000-barrels-per-day Buzzard field in the North Sea.

This is compared with a 900,000-barrel build in inventories for the week to March 24, which made traders perk up because the figure was substantially lower than API estimates for the period, which pegged the build at 1.9 million barrels.

Oil trading data in Thomson Reuters Eikon shows that OPEC shipments to the rest of the world fell to 813.7 million barrels by the end of March from 796.6 million barrels in January.

U.S. crude stockpiles surged by 1.6 million barrels to 536 million barrels-the seventh record level in the last eight weeks, as exports dipped and production continued to climb, according to the U.S. Energy Information Administration. "Once U.S. data starts showing the decline as well, it gives further support to the oil market rebalancing story and that the OPEC deal is working".

Still, a rise in USA output-prompted in part by higher prices due to the OPEC-led cut-is likely to provide a headwind for prices, analysts said.

  • Jon Douglas