By Jenny W. Hsu 
 

Crude futures rebounded in Asia trade Thursday after data showed U.S. gasoline and distillates stocks declined in the latest reporting week, signalling that refiners have returned from maintenance and crude demand in the U.S. is set to rise.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at $48.35 a barrel at 0124 GMT, up $0.31 in the Globex electronic session. May Brent crude on London's ICE Futures exchange rose $0.30 to $50.94 a barrel.

Data by the U.S. Energy Information Administration showed U.S. gasoline stocks fell by 2.8 million barrels in the week ended March 17, marking a fifth straight drawdown. Gasoline demand is expected to march higher as U.S. approaches the summer driving season. Distillate stocks also fell by 1.9 million barrels.

Crude supplies, however, swelled by 5 million barrels, bringing the total to a record high of 533.1 million barrels. Apart from domestic production which rose for the fourth week to 9.13 million barrels a day, strong imports also contributed to the growth, analysts said.

The data offered mixed messages to the market. On one hand, the rise in U.S. refinery utilization rate indicates the annual maintenance season is now past and refiners will lap up more crude, said Societe Generale. But the accelerating crude output by upstream players means the U.S. is well positioned to crimp the Organization of the Petroleum Exporting Countries' effort to pare down the still-bloated global crude inventories. Last year, OPEC and a handful of heavyweight producers such as Russia, clinched a deal to cut their combined daily productions by 1.8 million barrels. Cartel officials have said the main objective of the pact is to push global inventories down to the five-year average level this year.

"Last week's increase in U.S. production and stocks will do little to assuage fears that the OPEC output cuts will not be enough to draw down stocks," said Thomas Pugh, a commodities economist at Capital Economics.

Some say the gush of new U.S. oil in the market, combined with rising production out of Libya, will leave OPEC little choice but to prolong the production cut plan beyond the initial January-June period.

"True, prices are falling now but these producers must take a long term view and cutting production will help tighten the oil market in the long run," said Barnabas Gan, an economist at Singapore-based OCBC bank.

Describing the recent above-10% fall in oil prices as a mere "blink", Mr. Gan still bets both WTI and Brent prices to rebound to $65 a barrel by the end of the year, driven by robust crude demand by developing economies such as India and China, as crude production in Asia dwindles.

China's crude output, Asia's largest crude producer accounting for 47% of region's total production, fell 8% on-year in the first two months to 3.9 million barrels. Meanwhile, its crude imports rose 3.5% on-year in February to 8.4 million barrels a day. Indonesia and Malaysia are also poised to see long term declines due to a dearth of new large-scale projects beyond 2018, said BMI Research.

Nymex reformulated gasoline blendstock for April--the benchmark gasoline contract--rose 26 points to $1.6045 a gallon, while April diesel traded at $1.5030, 62 points higher.

ICE gas oil for April changed hands at $452.50 a metric ton, up $5.50 from Wednesday's settlement.

Write to Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

March 22, 2017 23:47 ET (03:47 GMT)

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