(Bloomberg) -- Oil rose amid projections that U.S. crude inventories declined while OPEC and other producers implement promised production cuts.
Futures rebounded after tumbling 2.6 percent Tuesday. U.S. stockpiles probably fell by 2 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Thursday. While OPEC member Kuwait has already cut output and non-member Oman said it would follow suit this month, rising production elsewhere could blunt the impact of accords to curb supply. Price gains accelerated as U.S. equities advanced and the dollar slipped, boosting investor demand for commodities priced in the currency.
"After the big drop the time has come to get back into the market," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. "We're waiting to see if there are going to be drops in inventories, which are still very high."
Oil last year capped its biggest annual gain since 2009 as the Organization of Petroleum Exporting Countries and 11 nations from outside the group agreed on a plan to reduce production. Libya, which along with Nigeria is exempt from the supply deal, is increasing output from its biggest oil field after two years of internal conflict.
West Texas Intermediate for February delivery rose 93 cents, or 1.8 percent, to settle at $53.26 a barrel on the New York Mercantile Exchange. Total volume traded was 15 percent below the 100-day average at 2:41 p.m. The contract touched $55.24 Wednesday, the highest since July 2015, before retreating. Prices rose 45 percent last year.
Futures climbed from the settlement after the industry-funded American Petroleum Institute was said to report U.S. crude stockpiles fell by 7.43 million barrels last week. February WTI traded at $53.30 at 4:40 p.m. in New York.
OPEC Cuts
Brent for March settlement advanced 99 cents, or 1.8 percent, to $56.46 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 52 percent in 2016, the first gain in four years. The global benchmark crude closed at a $2.24 premium to March WTI.
See also: OPEC's oil cuts deal shifts focus to compliance
OPEC's crude production fell by 310,000 barrels a day in December, as unplanned disruptions in Nigeria reduced supply before deliberate cuts took effect this month. OPEC -- excluding Indonesia which suspended its membership on Nov. 30 -- pumped 33.1 million barrels a day last month, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.
Under the terms of OPEC's agreement, the group's total output including Indonesia would fall to 32.5 million barrels a day. Compliance with that target will be judged against independent estimates compiled by OPEC, which can vary from the Bloomberg News survey.
U.S. crude stockpiles were at 486 million barrels in the week ended Dec. 23, the highest seasonal level in more than three decades, according to weekly data compiled by the Energy Information Administration since 1982. The forecast decline would be the first drop in three weeks.
"I don't expect any big moves after yesterday's big reversal," Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by telephone. "Unless there's an unexpected headline, we will probably wait until tomorrow's report before making a big move."
Oil-market news:
- Libya is re-opening its last major oil-export terminal that was shut down by conflict. The nation's oil production has now risen to 700,000 barrels a day, according to National Oil Corp.
- Statoil ASA said it would boost exploration for the first time since 2013 as cost cuts and lower supplier fees allow it to get more done for less.
--With assistance from Grant Smith and Jessica Summers To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Carlos Caminada, Jim Efstathiou Jr.
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