Crude Oil continued its torrid start to the year as bullish supply news from the world’s second-biggest producer and disruptions to refiners along the Houston Ship Channel kept futures on pace for the best first quarter since 2002.
Crude oil rose 1.9 percent in New York on Tuesday. Energy Minister Alexander Novak told reporters in Moscow that Russia will likely reach its pledged output cut of 228,000 barrels a day by the end of the month.
OPEC and its partners, led by Saudi Arabia, have been cutting supplies to counter a global supply glut. In the U.S., the industry-funded American Petroleum Institute was said to report crude stockpiles rose 1.93 million barrels last week.
Meanwhile, a four-day closing of the Houston Ship Channel following a tank fire and subsequent chemical spill has further disrupted supply networks.
“We’re back in rally mode,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “We’re seeing a steady supply decline that’s getting us back to $60 and everyone is trying to figure out the fallout from the refinery snags in Houston and the disruption in the Houston Ship Channel.”
Crude futures have rallied 32 percent this year as OPEC and its allies implement production cuts to stave off a global surplus. American sanctions on Iran and Venezuela have further squeezed supplies, making for a tighter market more susceptible to disruptions like those in Houston.
“The expectation is very much that OPEC+ will stick to its 1.2 million barrel a day reduction plan for as long as one would expect for that market to come into balance,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto.
West Texas Intermediate for May delivery traded at $59.97 a barrel at 4:45 p.m. after settling at $59.94 on the New York Mercantile Exchange.
Brent for May settlement advanced 76 cents to $67.97 a barrel at settlement on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of $8.03 to WTI.