Futures Movers: Oil prices gain as fall in U.S. crude supply feeds bets for OPEC output-cut extension

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Markets/commodities reporter

Markets reporter

Oil prices climbed Wednesday as a weekly decline in U.S. crude supplies backed expectations that OPEC will decide to extend its output-cut deal when it meets with other major producers next week.

The U.S. Energy Information Administration on Wednesday said crude supplies fell by 1.9 million barrels for the week ended Nov. 17. That was just under the forecast for a decline of 2.1 million barrels from analysts surveyed by S&P Global Platts, and the American Petroleum Institute on Tuesday had reported a drop of 6.4 million barrels.

January West Texas Intermediate crude CLF8, +1.57%  climbed 92 cents, or 1.6%, to $57.75 a barrel on the New York Mercantile Exchange. It was trading around $57.69 before the supply data. January Brent LCOF8, +0.62%  rose 40 cents, or 0.6%, to $62.97 a barrel on the ICE Futures Europe exchange.

Read: When do markets close for Thanksgiving?

The EIA’s reported fall in crude supply “came in much less than expected from [Tuesday’s] API estimates,” said John Macaluso, an analyst at Tyche Capital Advisors, but there were other bullish factors outlining the market today.

Disruptions with the Keystone pipeline, following a leak last week, were “evident” in the large 1.8 million-barrel draw at the Cushing, Okla., oil-trading hub, Macaluso said.

Gasoline stockpiles were unchanged last week, while distillate stockpiles edged up by 300,000 barrels, according to the EIA. The S&P Global Platts survey forecast a supply rise of 1 million barrels for gasoline and a decline of 1.8 million barrels for distillates, which include heating oil.

On Nymex, December gasoline RBZ7, -0.42%  fell 0.2% to $1.769 a gallon, while December heating oil HOZ7, -0.16%  was nearly flat at $1.936 a gallon.

The oil market is looking ahead to a meeting of the Organization of the Petroleum Exporting Countries on Nov. 30. The cartel’s members and non-OPEC producers, including Russia, are widely expected to extend a deal to reduce production and bring down the global supply past its March expiration.

Read: OPEC oil ministers will fact his dilemma when they meet to extend production cuts

But “speculation is mounting over whether the cartel, along with its key partner Russia, will extend its rebalancing act to the end of 2018,” said Adrienne Murphy, chief market analyst, at AvaTrade.

If the group “fails to agree on increasing the scope of supply cuts, a lengthy period of selloffs will surely follow,” she told MarketWatch.

Rising crude production in the U.S., which isn’t part of the output-cut pact, has been a key concern. The latest weekly decline in domestic stocks helped ease those concerns, but Wednesday’s EIA report also showed that total U.S. crude output edged up by 13,000 barrels a day last week to 9.658 million barrels a day.

Read: Are we entering the age of the ‘petro-yuan’?

Meanwhile, December natural gas NGZ17, -0.96%  traded at $2.985 per million British thermal units, down 1.1%.

Prices continued to trade lower after the EIA reported Wednesday that domestic supplies of natural gas fell by 46 billion cubic feet for the week ended Nov. 17. That was below the fall of 54 billion forecast by analysts surveyed by S&P Global Platts. The data were released a day early because of Thursday’s Thanksgiving holiday.

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