Oil traded above $48 a barrel after a reported decline in U.S. crude stockpiles and as the International Energy Agency said the market needs time to drain a global inventory glut.
Futures advanced 1.6 percent in New York. U.S. crude inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report Tuesday.
Yet, data from the Energy Information Administration on Wednesday is forecast to show stockpiles rose by 3.13 million barrels, according to a Bloomberg survey. Oil markets are still struggling to clear a surge in supply from OPEC at the end of last year, according to the International Energy Agency.
Oil last week broke below $50 a barrel for the first time since December as rising U.S. supply has offset the impact of supply reductions from members of the Organization of Petroleum Exporting Countries and 11 other nations that started Jan. 1.
While an OPEC report Tuesday showed Saudi Arabia’s production climbed back above 10 million barrels a day in February, output still remains below a ceiling set under the six-month cut deal.
“The IEA report was more of a hopeful analysis, acknowledging that inventories are not coming down, but that they could in the second half of the year,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone.
“There is a lot of doubt around the API number. This is a market that’s just swamped and has broken down to the downside. It’s going to be hard to hold gains.”
West Texas Intermediate for April delivery rose by 77 cents to $48.49 a barrel at 9:27 a.m. on the New York Mercantile Exchange. Total volume traded was about 5 percent above the 100-day average.
Brent for May settlement advanced 74 cents, or 1.5 percent, to $51.66 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.55 to May WTI.