Oil hits one-month high
near $55 on tighter supplies
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[April 05, 2017]
By Alex Lawler
LONDON
(Reuters) - Oil hit a one-month high near $55 a barrel on Wednesday as a
fall in U.S. crude inventories raised hopes OPEC-led supply cuts were
clearing a glut, while an outage at the largest UK North Sea oilfield
lent support.
U.S. crude inventories fell by a more-than-expected 1.8 million barrels
last week, American Petroleum Institute data showed on Tuesday. The
focus is now on whether the government's supply report on Wednesday
confirms the decline.
"Should it confirm that U.S. 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 U.S. crude supplies," said Stephen Brennock of oil broker
PVM.
Global benchmark Brent crude had risen 60 cents to $54.77 a barrel by
1154 GMT. It reached $54.91 intraday, the highest since March 8. U.S.
crude was up 61 cents at $51.64.
Oil also gained after an outage at the 180,000-barrels-per-day Buzzard
field in the North Sea. Buzzard is the largest field contributing to
Forties, the most important of the four crude streams underpinning
Brent.
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"This outage more than offsets the increase in oil production in Libya,"
said Carsten Fritsch of Commerzbank, referring to the recovery in output
at Libya's Sharara field.
"Now, it seems that crude oil stocks have peaked at least and are
starting to decline," he added.
An output cut from Jan. 1 led by the Organization of the Petroleum
Exporting Countries has helped Brent recover from a 12-year low near $27
last year, although rising U.S. output and stubbornly high stocks have
limited the rally.
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![](../images/040517pics/busine43.jpg)
An oil derrick and wind turbines stand above the plains north of
Amarillo, Texas, U.S., March 14, 2017. REUTERS/Lucas Jackson
![](http://archives.lincolndailynews.com/2017/Apr/05/images/ads/current/centerforyouth_lda2_COUNSELING_2017.png)
OPEC
and non-OPEC producers, including Russia, together cut supply by about 1.8
million bpd for six months until June, and are considering whether to extend the
agreement.
The inventory surplus is likely to be eroded, even without a prolonged cut,
analysts at JBC Energy said.
"In the event of OPEC/non-OPEC not extending the cuts into the second half, the
world would still continue to draw stocks at a mild pace of about 200,000 bpd
until September, thereby lending support to prices one way or another," JBC
said.
Still, a rise in U.S. output - prompted in part by higher prices due to the
OPEC-led cut - is likely to provide a headwind for prices, analysts said.
U.S. drillers added rigs for an 11th straight week, data showed on Friday, as
companies boost spending on new production.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson
and Edmund Blair)
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