Oil continues march higher as OPEC prepares to meet; U.S. stockpile data ahead

Investing.com - Oil prices were higher in European trading on Wednesday, trying for their sixth straight session of gains on the likelihood that OPEC will extend production cuts for another nine months when it meets on Thursday.

The U.S. West Texas Intermediate crude July contract added 18 cents, or around 0.4%, to $51.65 a barrel by 2:50AM ET (06:50GMT). The U.S. benchmark settled higher for the fifth straight session on Tuesday after hitting its strongest since April 19 at $51.79.

Elsewhere, Brent oil for July delivery on the ICE Futures Exchange in London tacked on 20 cents to $54.35 a barrel, after climbing to its highest since April 19 at $54.43 a day earlier.

Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on Thursday to decide whether to extend their current production agreement beyond a June 30-deadline.

In November last year, OPEC and 11 other non-OPEC producers, including Russia, agreed to cut output by about 1.8 million barrels per day between January 1 and June 30.

Most market analysts expect the oil cartel to extend output cuts for a further nine months until March 2018, instead of six months as previously expected.

There is also talk that OPEC is looking at the option of deepening current production cuts, but it is not clear whether there would be support for that.

So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya, and a relentless increase in U.S. shale oil output.

The U.S. rig count rose for the 18th week in a row to the highest level since April 2015 last week, implying that further gains in domestic production are ahead.

Investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products.

The U.S. Energy Information Administration will release its official weekly oil supplies report at 10:30AM ET (14:30GMT) Wednesday.

Analysts expect crude oil inventories dropped by around 2.4 million barrels at the end of last week, while gasoline supplies are seen decreasing by about 1.1 million barrels and distillates are forecast to fall by 743,000 barrels.

After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories fell by a less-than-expected 1.5 million barrels in the week ended May 19. The API report also showed a decline of 3.15 million barrels in gasoline stocks, while distillate stocks dropped by 1.85 million barrels.

Elsewhere on Nymex, gasoline futures for June inched up 0.3 cents, or 0.2%, to $1.668 a gallon, while June heating oil advanced 0.7 cents to $1.614 a gallon.

Natural gas futures for July delivery climbed 1.4 cents to $3.326 per million British thermal units.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App