Oil Prices Rise on Signs Glut May Abate

Oil Prices Rise on Signs Glut May Abate

Latest U.S. oil supply data suggest global oil glut may start to ebb

Oil pump jacks work in unison, in Williston, N.D. Oil prices rose in volatile trade on Thursday as the latest U.S. supply data suggested the crude oil glut might be starting to abate. PHOTO: ASSOCIATED PRESS

By

GEORGI KANTCHEV/WSJ

Updated May 7, 2015 5:41 a.m. ET

LONDON—Oil prices rose in volatile trade on Thursday as the latest U.S. supply data suggested the crude oil glut might be starting to abate.

Data late on Wednesday showed that U.S. crude oil stockpiles fell for the first time this year last week. While the weekly data are volatile and subject to revision, they underpin bullish sentiment which recently has sent prices 40% higher from their lows earlier this year.

Brent crude for June delivery rose 0.8% to $68.35 a barrel on London’s ICE Futures exchange and was on track for its third consecutive session gain.

Light, sweet crude futures for delivery in June on the New York Mercantile Exchange were trading above $60 a barrel for the second consecutive day. The contract was trading at $61.18 a barrel recently, up 0.4% from Wednesday’s settlement.

The Energy Information Administration reported on Wednesday that U.S. oil inventories fell 3.9 million barrels last week, the first weekly decline since Dec. 26.

“It is about time that U.S. crude inventories drop,” said Daniel Ang, analyst at Phillip Futures. “With refinery utilization rates expected to remain strong, we would likely be seeing inventory drop further.”

However, at 487.0 million barrels, crude oil inventories are at the highest level for this time of year in at least the last 80 years, the EIA said.

Oil production in the U.S. remained stable, at 9.3 million barrels a day, despite the continued drop in oil drilling rigs since October last year.

The chance of a rebound in U.S. oil rigs and output has actually increased as oil prices are now about 40% above their recent lows, said a report by Capital Economics.

“This should limit the upside for prices over the rest of this year,” it added.

Traders are also tracking the release of U.S. jobs data on Friday. The nonfarm payrolls data could provide clues on the likely timing of the Federal Reserve’s interest rate increases, which in turn could have a bearing on the dollar’s strength—a key factor for dollar-priced commodities like oil.

Nymex reformulated gasoline blendstock for June—the benchmark gasoline contract—rose 0.2% to $2.0415 a gallon, while ICE gas oil for May changed hands at $620.00 a metric ton, down $1 from Wednesday’s settlement.

—Biman Mukherji contributed to this article.

Write to Georgi Kantchev at georgi.kantchev@wsj.com