(Bloomberg) -- Oil rose toward a five-month high after an industry report signaled an unexpected drop in U.S. crude inventories last week, adding to the picture of a tightening global market.
Futures in New York advanced as much as 0.8 percent after gaining 1 percent on Tuesday. U.S. stockpiles declined by 3.1 million barrels last week, the American Petroleum Institute was said to report. If confirmed by government data due later on Wednesday, that would be the first decline in four weeks and defy analyst forecasts for inventories to rise. China reported first-quarter economic growth that beat estimates, adding to crude’s upward impetus.
Oil has risen for all but three weeks this year as the Organization of Petroleum Exporting Countries and its allies reduced production and U.S. sanctions on Iran and Venezuela further tightened supply. The cuts have been so successful they’ve spurred speculation the cartel risks letting crude surge too high, which would likely prompt a backlash from President Donald Trump.
“Oil prices reacted to the unexpected decline in U.S. inventories, which tend to rise at this time of the year,” said Tomomichi Akuta, a senior economist at Mitsubishi UFJ Research and Consulting Co. in Tokyo. “It probably reflects robust American oil exports,” he said, adding that Trump will probably try and get OPEC to keep prices in check if they keep rising.
West Texas Intermediate for May delivery rose 47 cents, or 0.7 percent, to $64.52 a barrel on the New York Mercantile Exchange as of 10:59 a.m. in Singapore. It advanced as much as 49 cents earlier and climbed 65 cents to close at $64.05 on Tuesday.
Brent for June settlement added 27 cents to $71.99 a barrel on the London-based ICE (NYSE:ICE) Futures Europe exchange. The contract rose 54 cents to $71.72 on Tuesday. The global benchmark crude was at a premium of $7.39 to WTI for the same month.
U.S. crude stockpiles probably grew by 2.3 million barrels to 458.9 million barrels in the week through April 12, according to the median estimate in a Bloomberg survey. The official data is due late morning in Washington.
While oil has managed to keep rallying despite a less-than-stellar global demand outlook, there have been some signs recently that the picture might not be as bad as previously thought. China’s first-quarter gross domestic product rose 6.4 percent from a year earlier, beating the 6.3 percent median estimate in a Bloomberg survey. Industrial production jumped 8.5 percent year-on-year in March, much higher than forecast.
