NEW YORK CITY – US crude oil prices continued their upward trend on April 27, breaking above $45/bbl for the first time since November, according to a report in the Wall Street Journal.
The US oil benchmark rose as high as $45.18/bbl on the New York Mercantile Exchange in early trading before retracing some of the gains. The contract last traded up 0.9% at $44.43/bbl. The global Brent contract was up 1.3% at $46.35/bbl.
Oil prices pared their gains a bit after inventory data from the US Energy Department showed a bigger-than-expected increase in crude inventories in the latest week.
The US Energy Department said that domestic crude inventories increased 2 MMbbl in the latest week, while analysts surveyed by The Wall Street Journal had projected an increase of 1.7 MMbbl.
Industry watchers had been looking for a decline in inventories after data from the American Petroleum Institute late Tuesday suggested inventories fell by 1.1 MMbbl last week.
Market bulls have been optimistic that the two-year glut of overproduction in the crude market is beginning to abate, and supply-and-demand conditions are starting to come back into balance.
“The battle of views continues, with the view that the market is already in a rebalancing pattern continuing to dominate the narrative,” Energy Management Institute analyst Dominick Chirichella was quoted to say in the report. “Unless there is a more consistent pattern of bearish current fundamentals, the upside rally is likely to continue.”
US oil production has fallen below 9 MMb/d in recent weeks, down from a peak of 9.7 MMb/d last April, according to the Energy Department.
“More evidence has surfaced about structural oil supply destruction, especially in the US, while global demand continues to set new highs, led by China and US gasoline consumption,” said Gordon Kwan, the head of regional oil and gas research at Nomura, in the Wall Street Journal report.
Looking ahead, the oil market could even face shortfalls, the report predicted. The global oil market could see a 4.5 MMb/d shortfall in supply by 2035 if oil field exploration does not increase, consultancy Wood Mackenzie said in a recent study. That would support higher prices in the coming years, as investment in oil infrastructure catches up with demand.