Brent is up 18% so far in April, heading for its largest monthly gain in a year. At 540.6 million barrels, US crude oil inventories are at historically high levels for this time of year.
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Brent crude futures were up 66 cents, or 1.4 per cent, at $46.40, having hit a 2016 high of $47.05 earlier.
Data last week from the U.S. Energy Information Administration show domestic crude oil inventories increased 2.1 million barrels from the previous week, a reversal of historic declines for this period.
US crude slipped by 20 cents at $45.83, after a year-to-date peak at $46.78.
“The market seems invincible, and well supported by money flow”, said Scott Shelton, broker at ICAP in Durham, North Carolina.
Fortune released an article today entitled Here’s Why Oil Prices Just Hit a 2016 High …with West Texas Intermediate (WTI) closing at $45.33 and Brent Crude closing at $47.34 per barrel according to Bloomberg Energy today, I was also wondering the same thing. While investors initially anticipated a build of 1.75 million barrels, market players adjusted their expectations after the American Petroleum Institute reported a surprising draw of 1.1 million barrels on Tuesday evening.
“The declining U.S. oil production and a weaker USA dollar are giving tailwind to prices, whereas the ongoing oversupply and record-high United States crude oil stocks are being ignored”, said Commerzbank analysts in a client note Friday.
With prices less than $5 away from $50 a barrel, investment bank Jefferies said the market “is coming into better balance” and would flip into undersupply in the second half of the year.
Rising US oil inventories tend to push prices lower because they add to the stubborn global supply glut and indicate weaker demand in the world s biggest crude-consuming nation. “Some producers are also likely to use the higher price level for hedging transactions, which would likewise prevent any future fall in production”, the bank said.
BMI Research said that it expected “China’s crude oil imports will remain strong over the short-term”, driven by strong demand from independent refineries and continued filling of its strategic petroleum reserves.
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Oil prices edged higher Wednesday, touching highs not seen in about six months, as the commodity maintained momentum amid signs that a global surplus is easing.
