By Dan Molinski 

-- Oil prices were moderately higher Thursday on expectations U.S. crude oil inventories could decline further as the summer-driving season approaches and refineries start boosting both their intake and output.

-- West Texas Intermediate futures, the U.S. oil benchmark, was 0.3% higher at $63.92 a barrel on the New York Mercantile Exchange.

-- Brent crude, the global oil benchmark, was up 0.4% at $71.87 a barrel on London's Intercontinental Exchange.

HIGHLIGHTS

U.S. Supplies: Prices were higher Thursday morning as markets reacted in delayed fashion to Wednesday's weekly report from the Energy Information Administration that showed U.S. oil inventories fell by 1.4 million barrels last week, which marked the first decline in four weeks.

The reduction in crude inventories was largely a result of a drop in crude-oil imports rather than U.S. refineries processing more oil, as the data showed U.S. refineries are operating at less than 88% of their potential, versus typical capacity utilization rates of well over 90% for this time of year. But that could change.

"Refinery utilization remains relatively low at 87.7% with turnaround season underway, exacerbated by a series of ongoing unplanned outages," said analysts at Houston-based Tudor Pickering Holt & Co. in a research note. "We expect utilization to trend higher as we shift into May as driving season picks up."

Tight Range: Despite oil's modest gains Thursday, U.S. prices over the past week have mostly been rangebound, and are yet to surpass a five-month closing high of $64.61 a barrel reached April 10. That is leading some to question whether the price rally -- WTI is 6% higher this month and 40% higher this year -- may be stalling out.

"WTI remains trapped in a comparatively tight trading range of less than $2-a-barrel that extends back to the beginning of last week," said Jim Ritterbusch, president of Ritterbusch & Associates, in a note to clients. "Significant guidance from the geopolitical factor has generally been lacking and support off of the macroeconomic element has been only modestly supportive."

Mr. Ritterbusch added that although his firm viewed Wednesday's EIA guidance as bullish on balance, the market's response to the data has thus far been muted. "As a result, we are maintaining a view that WTI will need to see some fresh highs within the next 2-3 sessions if this year's bull move is to prove sustainable."

INSIGHT

Schlumberger: Oil-field services giant Schlumberger on Thursday reported a 20% fall in net income but better-than-expected revenue for the first quarter, and the company's chief executive, Paal Kibsgaard, predicted oil prices will continue to rise this year due to increased global demand and slowing production growth in certain regions.

"From a macro perspective, we expect the oil market sentiments to steadily improve over the course of 2019, supported by a solid demand outlook combined with the OPEC and Russia production cuts taking full effect, slowing shale oil production growth in North America, and a further weakening of the international production base as the impact of four years of underinvestment becomes increasingly evident," Mr. Kibsgaard said.

AHEAD

-- Baker Hughes reports its weekly rig-count on U.S. drilling activity Friday at 1 p.m. ET.

Write to Dan Molinski at Dan.Molinski@wsj.com

(END) Dow Jones Newswires

April 18, 2019 10:20 ET (14:20 GMT)

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