Futures Movers: Oil prices score biggest one-day gain in nearly 3 weeks

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Oil prices settled higher Monday, tallying their largest single-session dollar and percentage gain in nearly three weeks, following a reported drop in crude stocks at the U.S. storage hub in Cushing, Okla.

Prices had seen some support from reports of temporary supply disruptions in Libya over the weekend and traders weighed comments from the International Energy Agency on U.S. production and global demand growth.

On the New York Mercantile Exchange, April West Texas Intermediate crude CLJ8, +2.32%  rose $1.32, or 2.2%, to settle at $62.57 a barrel. May Brent crude LCOK8, +1.96% the global oil benchmark, added $1.17, or 1.8%, to $65.54 a barrel on London’s ICE Futures exchange. WTI and Brent marked their biggest dollar and percentage gains since Feb. 14, according to FactSet data.

Traders “focused on the key Nymex delivery point that recently has been running dry,” said Phil Flynn, senior market analyst at Price Futures Group.

Data from Genscape reportedly show a sizable decline in last week’s crude supplies at Cushing, according to Bloomberg, which notes that supplies at the key pipeline hub are already at their lowest level since 2014. A forecast complied by Bloomberg also revealed that crude inventories at the hub fell by 600,000 barrels last week.

Meanwhile, the International Energy Agency on Monday forecast the U.S. would become the world’s top crude producer by 2023 with production hitting a record of 12.1 million barrels a day.

However, Flynn said “global oil demand obviously is much stronger that people think it is, or maybe shale oil production is not as prolific as the [IEA] keeps telling us it is.”

The IEA said that “rising oil production from the U.S. alone will need to cover 80% of the world’s demand growth over the next two years,” with U.S. output set to grow by 3.7 million barrels per day over the next five years, according to Flynn.

“If they are wrong and the U.S. misses that growth target, it is likely the globe will be woefully undersupplied,” he said.

The IEA also mentioned the “need for more investment in upstream oil operations, which still hasn’t come back since the oil market washout we saw between mid-2014 and early-2016,” said Tyler Richey, co-editor of the Sevens Report. “The lack of investment in production operations could mean supply side challenges down the road.”

Reports over the weekend that Libyan production fell by around 380,000 barrels a day had helped the markets recover some of last week’s losses overnight.

S&P Global Platts reported early Monday, however, that Libya could see an increase in output in the coming days after the reopening of a key crude oil export pipeline from Libya’s Sharara field, following its closure on Sunday.

In other oil-related news, global oil players have gathered in Houston for CERAWeek by IHS Market.

“Energy traders have been speculating that the conference could provide an opportunity for U.S. and Saudi Arabian producers to meet and discuss production levels,” said Colin Cieszynski, chief market strategist at SIA Wealth Management Inc.

“I would be surprised if the U.S. agreed to any limits on production, especially with the Trump Administration taking tough stances on trade,” he said. “Depending on how any talks go (or if they happen at all), we could see significant swings in both directions for the oil price over the course of this week.”

Rounding out action in the energy market, April gasoline NGJ18, +0.30% rose 1.8% to $1.935 a gallon. April heating oil HOJ8, +0.93%  added 0.9% to $1.897 a gallon. Natural-gas futures for the same month NGJ18, +0.30%  ended at $2.704 per million British thermal units, up 0.3%.