Oil rose to an eight-week high in New York after U.S. production declined and a weaker dollar boosted the attractiveness of commodities.
Futures rose as much as 1.9 percent. Output fell for a sixth week to 9.08 million barrels a day, the lowest level since November 2014, according to the Energy Information Administration. Crude inventories rose, keeping supplies at the highest in more than eight decades. OPEC members will meet with Russia and other producers in Moscow on March 20 to resume talks on an output cap, Nigeria’s oil minister said.
“The mood has changed in the market and we are a little bit more optimistic about the future,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The market is shaking off the big inventories builds that we saw in recent weeks.”
Oil is still down about 5 percent this year on speculation a global glut will be prolonged amid brimming U.S. stockpiles and the outlook for increased exports from Iran after the removal of sanctions. Exxon Mobil Corp. scaled back production targets and said drilling budgets will continue to drop through the end of next year as the oil market shows no signs of a significant recovery.
West Texas Intermediate for April delivery rose 41 cents to $35.07 a barrel at 11:19 a.m. Eastern time on the New York Mercantile Exchange, after reaching $35.32. The contract rose 26 cents to $34.66 on Wednesday, the highest close since Jan. 5. Total volume traded was about 2 percent above the 100-day average.
Brent for May settlement gained 22 cents to $37.15 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of 46 cents to WTI for May.
The Bloomberg Dollar Spot Index fell 0.5 percent, after earlier gaining 0.1 percent.
U.S. crude stockpiles expanded by 10.4 million barrels to 518 million, according to a report from the EIA Wednesday. Supplies at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, rose for a fifth week to a record 66.3 million barrels.
The market’s saying “You can’t ignore fundamentals,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “With the massive amount of supplies that we have, the market should go lower. I think prices will go back to below $30 in a few weeks.”
Others are more optimistic. There will be a “dramatic price movement” when the meeting between OPEC members and Russia takes place, Nigerian Petroleum Minister Emmanuel Kachikwu said at a conference in Abuja on Thursday. Saudi Arabia, Russia, Qatar and Venezuela agreed on Feb. 16 in Doha that they would freeze production, if other producers followed suit, in an effort to tackle the global oversupply.
Exxon’s output will be the equivalent of 4 million to 4.2 million barrels a day through 2020, compared with the previous target of 4.3 million as soon as next year, Chairman and Chief Executive Officer Rex Tillerson said at the company’s annual strategy session in New York on Wednesday. Capital spending will fall about 25 percent this year to $23.2 billion and will decline again in 2017.