Oil steadies after surge with supplies and stockpiles in focus

Oil held near the highest close since January as traders tracked supply constraints and a US industry report pointed to another decline in crude holdings at the nation’s key storage hub.

West Texas Intermediate traded above $81 a barrel after rallying by 2.2 per cent on Tuesday.

Shipments from Russia have weakened after Moscow vowed to reduce production, according to tanker-tracking data.

In the Middle East, meanwhile, pipeline flows from Iraq’s semi-autonomous Kurdistan region remain halted.

The industry-funded American Petroleum Institute reported that crude holdings at Cushing, Oklahoma, contracted by 1.4 million barrels last week, according to people familiar with the data.

If confirmed by government figures later on Wednesday, that would be a sixth consecutive drawdown.

Crude has rebounded from a 15-month low hit in March after the Organization of Petroleum Exporting Countries and its allies cut output, US crude holdings declined, and traders stuck to the view that Chinese demand will pick up this year.

The gain on Tuesday came despite a forecast from the US Energy Information Administration that worldwide crude supply would top demand this year, and a cautious macro outlook from the International Monetary Fund.

Key timespreads suggest that the market is tightening. WTI’s prompt spread — the difference between its two nearest contracts — has swung to 5 cents a barrel in backwardation. That’s the most this year on a closing basis.

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