Global oil prices have risen for the fourth straight day, with US prices jumping after a government report predicted a drop in US shale-oil production.
West Texas Intermediate for May delivery, the benchmark S&P Futures contract, added US$ 1.38 (NZD$ 1.04) to close at US$ 53.29 a barrel on the New York Mercantile Exchange on Tuesday.
Brent North Sea crude for May, the global benchmark traded in London, settled at US$ 58.43 a barrel, up a modest 50 cents from Monday’s close.
“The EIA report on Monday seems to be carrying the day today,” said Robert Yawger of Mizuho Securities.
The US Department of Energy’s Energy Information Administration said that output from the country’s seven shale regions, which has been driving US crude production to a record high, looked set to fall by 57,000 barrels per day in May.
Analysts noted it was the first time the EIA had projected a drop since it began the monthly drilling productivity report in 2013.
“This is adding credence to the belief that lower prices and the precipitous drop in the rig count are finally impacting production, sending prices to test the highs last seen in early February,” said Matt Smith of Schneider Electric.
But Commerzbank analysts underscored the limited impact in the context of the copious global supply that has pushed prices about 50 per cent lower since mid-2014.
“Compared to the current oversupply of up to two million barrels per day … this would be but a drop in the ocean,” they said in a research note.
Traders also expected another rise in US crude inventories to new record highs in Wednesday’s DoE report.
Tim Evans of Citi Futures predicted US crude stocks would rise by as much as four million barrels for the week ended April 10, including another gain at the Cushing, Oklahoma, delivery point for WTI futures.