Crude Rises With Traders Awaiting Data on U.S. Supply Levels

(Bloomberg) -- Oil edged up, holding near the highest since 2014, with traders awaiting U.S. supply data that will show whether inventories tightened further at the Cushing, Oklahoma crude storage hub. 

U.S. crude futures rose as much as 0.6% on Tuesday. The global benchmark Brent is approaching its 2018 high of $86.74 a barrel. The industry-funded American Petroleum Institute’s inventory tally due later Tuesday will be closely watched. A sharp drawdown at the key storage hub in Cushing in recent weeks has led to huge moves in timespreads for oil benchmarks as traders pay premiums for more immediate supply. Supply and demand balances at the hub drive daily oil trading worth hundreds of millions of dollars.

“We’re entering a price level where everyone’s eying $90 for Brent,” said Ed Moya, senior market analyst at Oanda Corp. “And if that happens, the momentum to a $100 is not going to take much.” 

Crude futures have surged in recent months with a shortage of natural gas and coal boosting demand for oil products. Larry Fink, chairman and chief executive officer of BlackRock Inc., even said there’s a high probability that crude could hit $100 a barrel. 

Meanwhile, the Organization of Petroleum Exporting Countries and its allies are due to gather next week to assess output policy. Nigeria joined fellow OPEC+ member Saudi Arabia this week in saying the group must resist pressure to raise oil production faster until the coronavirus pandemic abates. 

The crude market’s pricing structure remains deeply backwardated, a bullish pattern in which near-term prices are more costly than those further out. Brent’s prompt spread -- the difference between its nearest two contracts -- was at 73 cents a barrel. It had rallied to as high as 97 cents on Monday.

Traders also are keeping tabs on talks that eventually may help revive an Iranian nuclear accord, allowing a pickup in crude exports. Discussions between Tehran and the European Union are due to be held in Brussels on Wednesday, part of a drawn-out effort to clear the way for a wider diplomatic push.

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