SINGAPORE: Crude prices extended gains in Asia on Thursday following a sizeable drop in US stockpiles, the first decline in seven weeks, indicating stronger demand in the world’s top oil consumer.
Official data showed US commercial crude inventories fell 4.9 million barrels in the week ending April 1, after rising by 2.3 million barrels the week before.
The figures helped crude build on already healthy gains that came on the back of comments from Kuwait that this month’s crucial producers’ meeting could see an agreement to limit output.
At about 3:15 a.m. local time Thursday, US benchmark West Texas Intermediate for delivery in May was up 39 cents, or 1.03 percent, at $38.11 and Brent crude for June rose 29 cents, or 0.73 percent, to $40.13.
Prices closed more than five percent higher on Wednesday.
“Prices edged up . . . after the EIA released supportive inventory data,” said EY oil and gas analyst Sanjeev Gupta, referring to the US Energy Information Administration.
Gupta and other analysts however doubted if the rebound will hold in the face of overproduction and weak demand.
“Without fundamental improvement in demand and supply conditions, oil prices are expected to remain in a holding pattern heading into a highly anticipated meeting in Doha in 10 days,” he told Agence France-Presse.
Key producers led by Russia and Saudi Arabia are set to meet on April 17 in Doha to discuss the global supply glut that has hammered prices, with proposals put forward to freeze output.
There had been doubts that an agreement would be reached as signs of discord emerged but recent the comments from Kuwait revived hopes for a deal.
“Kuwait . . . suggested that low oil prices are hurting everyone and a freeze is needed to set a floor for oil prices,” said Margaret Yang, market analyst at CMC Markets Singapore.
“With uncertainty remaining ahead of the talk on 17th April, oil price movements may remain choppy before any firm deal is made,” she said in a note.