Oli Rises to 2015 high as date signals end of US Supply surge

[New York] Oli surged to the highest level of the year as a break in the US shale boom signaled a potential easing of the biggest supply glut since 1930. Crude supplies increased lasst week at the slowest pace since January, the Energy Information Administation  said. Output from shale formations such as North Dakota's Bakken will fall in May, the EIA said Monday.

A near 50 per cent plunge in prices since the middle of last year forced half the country's drilling rigs offline and wiped out thousands of jobs. US refineries have boosted operations, processing a record amount of crude for this time of year.

"We're at the cusp of a manjor change," Matt sallee, who helps manage US$17.7 billion oil-related assets at Tortoise Capital Advisors in Leawood, Kansas, said by phone. "Production is stabilising and  set to move into decline faster than people expected."

West Texas Intermediate for May delivery increased US$3.10 or 5.8 per cent, to close at US$56.39 a barrel on the New York Mercantile Exchange. It's the highest settlement since Dec 23. Volume was 77 per cent above the 100-day average at 2:50 p.m.

Break Market Brean for May Settlement, which  expired Wednesday, climbed US$1.89 or 3.2 per cent, to end the session at US$60.32 a barrel on the London-based ICE Futures Europe Exchange. It was the highest close for a front-month contract gained US$3.51, or 5.9 per cent, to US$63.32. Volume was up 18 per cent from the 100-day average. The European benchmark crude closed at US$3.93 premium to WTI.

Futures extended gains after the federal Reserve's Beige Book showed the economy expended in most US regions from mid-February to the end of March, with higher retail sales and rising demand fo business service. Total industrial production dropped last month, a Fed resport showed.

US crude supply gain was a lot smaller than what we've gotten accustomed to so the report is bearish even though inventories are at the highest level in more than 80 years," John Kilduff, partner at Again Capital LLC, an energy hedge fund in New York, said by phone," The big drop in gasoline is also supportive, since it's the seasonal leader." Inventories at Cushing, Oklahoma, the delivery point for WTI tranded in New York, climbed 1.29 million barrel to a record 61.5 million.

Crude production fell 20.000 barrels a day to 9.38 million last week, according to the EIA that's down from 9.42 million on March 20, the most in weekly estimates taht started in january 1983. output has surged as the combination of horizontal drilling and hydraulic fracturing or fracking, unlocked supplies from shale formations in the cantral US.