Oil headed for a weekly increase as U.S. stockpiles retreated from record levels while Saudi Arabia said it’s prepared to continue production curbs in the second half of the year.
Futures were little changed in New York, up 0.9 percent for the week. U.S. inventories last week fell for the first time this year, according to Energy Information Administration data on Wednesday. Output curbs by OPEC and its partners may continue past June if global stockpiles remain above the five-year average, according to Saudi Arabia’s Energy Minister Khalid Al-Falih.
Oil last week broke below $50 a barrel for the first time since December as rising U.S. output countered production curbs by members of the Organization of Petroleum Exporting Countries and other nations. While markets are still struggling to clear a surge in supply from OPEC at the end of 2016, compliance with the cuts remains above 90 percent, the International Energy Agency said.
“The recovery at this stage remains fragile,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “The market managed to find support at key levels following a small drop in U.S. crude inventories. We are very likely to see an extension to the current production-cut deal if the aim is to bring stocks down to the five-year average.”
West Texas Intermediate for April delivery was at $48.89 a barrel on the New York Mercantile Exchange, up 14 cents, at 9:36 a.m. in London. Total volume traded was about 45 percent below the 100-day average. Prices fell 11 cents to $48.75 on Thursday after surging 2.4 percent the previous session.
Brent for May settlement rose 11 cents to $51.85 a barrel on the London-based ICE Futures Europe exchange. The contract on Thursday fell 7 cents to $51.74. The global benchmark crude traded at a premium of $2.46 to May WTI.
U.S. crude inventories dropped by 237,000 barrels last week to 528.2 million barrels, according to the EIA. Stockpiles remain near the highest level in more than three decades. Oil production expanded for a fourth week to 9.1 million barrels a day, the most since February 2016.