By Neanda Salvaterra, Jenny W. Hsu and Summer Said
Crude prices edged higher on Wednesday as investors digested mixed messages from major oil producers on whether they will extend a supply cut that has helped lift crude's value from last year's lows.
Brent crude, the global oil benchmark, rose 0.5% to $55.15 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.3% at $52.99 a barrel.
The Organization of the Petroleum Exporting Countries' Secretary-General Mohammad Barkindo said Wednesday it is too early to decide whether the output cut agreement will be extended for another six months, though some investors took hope from his comment that the deal was a "work in progress."
His remarks came two days after Saudi Arabia's energy minister Khalid al-Falih cast doubt on whether OPEC would extend the agreement next month.
Last year OPEC and external producers, including Russia, committed to eliminate about 1.8 million barrels of oil a day in a bid to rebalance the market and raise petroleum prices. The agreement helped bump oil prices about 20% since 2016.
"At the moment we remain stuck in a tug of war between U.S. shale and OPEC," said Emily Ashford director of energy research at Standard Chartered in London. "People are waiting to see if OPEC's supply action is going to happen."
Investors have been awaiting the cartel's May 25 meeting, where a decision on output is set to be made. Representatives would then meet with major non-OPEC producers--such as Russia--a few days later to get their input.
Analysts have warned a failure to extend the cuts would sink oil prices because investors have expanded their net-long positions assuming an extension.
"Their expectations are now likely to face a renewed test," said Commerzbank, noting that top energy watchdogs such as the International Energy Agency recently lowered their forecast for global oil-demand growth while raising projections of non-OPEC supplies.
Investors are also trying to decipher mixed data from the American Petroleum Institute, an industry group.
JBC analysts said the "API inventory data ruffled some feathers," as it forecast an 840,000-barrel fall in U.S. crude supplies, but a 1.4-million-barrel increase in gasoline stocks and a 1.8-million-barrel decline in distillate inventories.
Overall, the U.S. Energy Information Administration has steadily projected an increase in U.S. supply, which is set to reach 9.9 million barrels a day in 2018. The latest EIA data is set for release later Wednesday.
According to The Wall Street Journal's survey of analysts, the average estimate is for a slight pullback in crude stockpiles last week and a bigger drop in gasoline inventories.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.20% to $1.71 a gallon. ICEgasoil changed hands at $492.00 a metric ton, up $0.75 from the previous settlement.
Write to Neanda Salvaterra at email@example.com, Jenny W. Hsu at firstname.lastname@example.org and Summer Said at email@example.com
(END) Dow Jones Newswires
April 19, 2017 07:28 ET (11:28 GMT)
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