Crude-oil futures edged higher Thursday, stabilizing a day after the U.S. benchmark plunged more than 6%On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded 48 cents, or 1%, higher at $50.90 a barrel. May Brent crude on London’s ICE Futures exchange rose $1.13, or 2%, to $56.68 a barrel.
U.S. crude-oil stockpiles rose more than expected, by 10.9 million barrels in the week ended April 3, hitting record highs, the U.S. Energy Information Administration said Wednesday, prompting a sharp selloff. “With no signs of any rapid improvement in the fundamental outlook as output continues to creep higher, market participants are growing increasingly worried that if the current trend continues U.S. crude storage facilities will soon reach capacity, which would require substantial production cuts to stabilize market prices and prevent further declines to front month WTI futures,” said Kash Kamal, senior research analyst at Sucden, in a note.
The U.S. Energy Department said earlier this week that the country remained the world’s top producer of petroleum and natural gas hydrocarbons in 2014, exceeding both Russia and Saudi Arabia, the second- and third-largest producers.
“While we expect U.S. oil supply to tighten later in 2015, the supply response will be milder and shorter-lived than previously thought,” ANZ Bank said, adding that it forecasts total 2015 tight oil production to be at similar levels to 2014.
Oil prices will be under pressure until there are stronger signals of growing demand, or a sharper slowing of U.S. oil production in response to lower prices.
So far, oil production from the Organization of the Petroleum Exporting Countries is also trending high at more than 30 million barrels a day, and weighing on prices.
Meanwhile, Iran’s leader on Thursday sounded pessimistic on prospects of completing a deal with world powers that would limit the country’s nuclear program in return for easing sanctions, The Wall Street Journal reported.
Oil had rallied earlier this week, boosted in part by fading expectations a deal would result in a near-term boost to Iranian oil exports.
Nymex reformulated gasoline blendstock for May RBK5, +1.26% —the benchmark gasoline contract—rose 1.94 cents, or 1.1%, to $1.7586 a gallon. May natural gas futures NGK15, -2.60% fell 7.1 cents, or 2.7%, to $2.548 per million British thermal units.