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U.S. crude, gasoline and distillate stockpiles
all fell last week, the American Petroleum Institute said on
Tuesday, ending months of builds that have lifted stocks to
record highs.
Oil shrugged off a bearish report from the International Energy
Agency (IEA), which said that market fundamentals looked loose
as global supplies increased, outpacing small rises in oil
demand.
Brent for June was up 35 cents at $67.21 a barrel by 1100
GMT (7.00 a.m. EDT). Brent hit a high of $69.63 on May 6, its
strongest since December. U.S. crude was up 50 cents at $61.25
after reaching an earlier high of $61.83.
U.S. crude rose 2.5 percent and Brent 3 percent on Tuesday,
underpinned by a weaker dollar and tensions in the Middle East.
Many analysts, including the IEA, say that global oil market
supply is rising as members of the Organization of the Petroleum
Exporting Countries (OPEC) pump record levels in a battle for
market share. [IEA/M]
"Despite tentatively bullish signals in the United States, and
barring any unforeseen disruption elsewhere, the market's
short-term fundamentals still look relatively loose," said the
IEA, which coordinates energy policies of industrial nations.
Global oil production exceeds demand by about 2 million barrels
per day (bpd), or more than 2 percent.
The IEA cut its estimate of demand for OPEC oil this year by
300,000 bpd at the same time as raising its forecast for
non-OPEC crude supply by 200,000 bpd.
But the oil market, which tends to focus on the U.S. market, is
still more concerned by evidence of a sharp slowdown in U.S.
production, particularly of shale oil.
The U.S. government has cut its 2015 forecast for crude output
growth to 530,000 bpd from 550,000 bpd and 2016 growth to 20,000
bpd from 80,000 bpd.
"Lower oil prices are already showing signs of demand
stimulation, especially in transportation fuels," Morgan Stanley
analysts said in a note.
OPEC on Tuesday raised its 2015 global oil demand forecast to
1.18 million bpd, above a previous estimate of 1.17 million bpd.
A modest drop in the U.S. dollar against a basket of major
currencies also supported oil prices. Dollar-denominated
commodities become more affordable to holders of other
currencies when the greenback weakens.
(Additional reporting by Florence Tan in Singapore; Editing by
David Goodman)
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