While there were wide expectations for a recovery in prices, the research house believes that last year
LONDON: Oil headed for the longest run of gains in six months as a drop in U.S. crude production and gasoline stockpiles eased concern that OPEC-led supply curbs were proving ineffective.
Futures added as much as 1% in New York, advancing for a seventh session. U.S crude output last week fell by the most in almost a year amid field maintenance in Alaska and tropical storm Cindy, while gasoline inventories fell for a second week. OPEC and its partners aren’t worried about the market recovery and don’t plan to discuss deeper cuts, said United Arab Emirates Energy Minister Suhail Mazrouei.
While prices have surged this week, oil in New York and London are still set for a loss in June -- a month in which prices typically gain. Crude futures tumbled into a bear market last week on concerns that rising global supply is offsetting cuts from the Organization of Petroleum Exporting Countries and its partners. Bank of America Corp. became the latest in a string of banks to cut its outlook for prices this year and next.
“There is cause to be confident that the long-awaited oil market rebalancing is fast approaching,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. “Doubts will linger over the staying power of this rally” and “several stumbling blocks still lie ahead of the price recovery.”
West Texas Intermediate for August delivery gained as much as 45 cents to US$45.38 on the New York Mercantile Exchange, and was at US$45.35 at 9:44 a.m. in London. Total volume traded was about 9% below the 100-day average. The contract gained 19 cents to US$44.93 on Thursday. Prices are down about 6.2% this month and are 10% lower this quarter.
Brent for August settlement, which expires Friday, rose as much as 45 cents to US$47.87 a barrel on the London-based ICE Futures Europe exchange. Prices are down 4.9% in June and 9.5% lower this quarter. The global benchmark crude traded at a premium of US$2.45 to WTI.
Bank of America lowered its 2017 WTI forecast to US$47 and 2018 to US$50, citing a continuing rise in oil output and disappointing demand. Prices will remain in contango, where near-term contracts are cheaper than long-dated ones, until year-end. Futures will only move into backwardation -- the inverse market structure that’s desired by OPEC -- by next summer, the bank said. - Bloomberg
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