By Eric Yep
Crude-oil futures extended gains in Asian trade Friday, helped
by a decline in U.S. oil inventories and a softer U.S. dollar.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in July traded at $58.39 a barrel at 0318 GMT, up
$0.71 in the Globex electronic session. July Brent crude on
London's ICE Futures exchange rose $0.58 to $63.16 a barrel.
U.S. commercial crude-oil inventories fell by a
stronger-than-expected 2.8 million barrels in the week ended May
22, the U.S. Energy Information Administration said Thursday.
However, U.S. crude production jumped to 9.57 million barrels a
day, breaking out of the production plateau it has been coasting on
since March, partly due to new oil fields ramping up in the Gulf of
Mexico, Societe Generale said in a report.
"With OPEC's June 5 meeting right around the corner and no
chance of a policy change, we will continue to focus on U.S.
production and production costs," the bank said.
Nymex crude is down by around 3.2% this month, and Brent crude
is down by around 6.2%, taking the gas out of the oil-price rally
over recent weeks. Investors are keeping to the sidelines ahead of
next week's meeting of the Organization of the Petroleum Exporting
Countries.
Most market participants are factoring in no change to OPEC's
production ceiling of 30 million barrels of oil a day and its
recent stance of not adjusting output levels to support prices.
"With [oil] prices forecasted to average higher in coming years
and OPEC production costs amongst the lowest in the industry, we
expect OPEC will allow prices to 'correct' the market while
safeguarding as much of their export revenues as possible,"
analysts at BMI Research, a unit of Fitch, said.
They also said that domestic oil consumption is rising in many
OPEC countries due to massive new refineries and oil-burning
electricity plants. Due to this, OPEC's oil production growth will
be a function of domestic demand rather than export strategy, BMI's
analysts said.
The research firm is bullish on Chinese oil demand and said
strategic stock-building and rising consumption from small-capacity
teapot refiners will buoy China's crude imports in the second half
of this year and in 2016.
Meanwhile, investors are tracking debt negotiations in Greece,
preliminary U.S. first-quarter gross domestic product data and U.S.
drilling rig-count numbers due later Friday for more cues.
Nymex reformulated gasoline blendstock for June--the benchmark
gasoline contract--rose 164 points to $2.0015 a gallon, while June
diesel traded at $1.8856, 152 points higher.
ICE gasoil for June changed hands at $577.75 a metric ton, up
$7.00 from Thursday's settlement.
Write to Eric Yep at eric.yep@wsj.com