U.S. benchmark oil prices surged to a four-month high after stockpiles at the nation’s biggest storage hub fell for the first time since November.
The drop in crude inventories at Cushing, Oklahoma, the main delivery point for West Texas Intermediate contracts, boosted optimism a supply glut will ease in the coming months.
Oil has rebounded from a six-year low in March on speculation a drilling slowdown will curb excess supply. The recovery may be short-lived if higher prices encourage producers to resume drilling too quickly.
“Prices picked up the moment we saw a Cushing draw of about 500,000 barrels,” Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kansas, who helps manage $16.9 billion, said by phone. “U.S. crude oil production appears to have leveled off. We are starting to see the impact of the drop in rig counts.”
WTI for June delivery gained $2.08, or 3.7 percent, to $59.14 a barrel at 1:25 p.m. on the New York Mercantile Exchange. The contract reached $59.33, the highest since Dec. 12. Prices are up more than 20 percent in April, heading for the biggest monthly gain since May 2009.
Brent for June settlement rose $1.82 to $66.46 on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $7.32 to WTI.
Cushing inventories fell 514,000 to 61.7 million barrels last week, the EIA said. Stockpiles had grown 38.3 million in the previous 20 weeks to the highest level since EIA weekly data started in 2004.
Total stockpiles climbed 1.91 million to 490.9 million barrels, rising for a 16th week, according to the EIA. That’s the highest in weekly data from the Energy Department going back to August 1982. Supplies haven’t been this high since 1930, based on monthly records dating back to 1920. Analysts surveyed by Bloomberg had expected a gain of 3.3 million.
“The market is seeing the first drain at Cushing and anticipates much more to come,” said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas. “The total crude build is smaller than expected, which is also supportive.”
Refineries operated at 91.3 percent of their capacity, up from 91.2 percent the previous week.
“Things continue to move in the right direction,” said Paul Crovo, a Philadelphia-based oil analyst at PNC Capital Advisor. “You’ll continue to see refineries coming back on line and you’ll start to see more drawdowns.”
Production rose by 7,000 barrels a day to 9.373 million, the first gain in three weeks. The number of drilling rigs targeting oil decreased to 703 last week, the fewest since October 2010, according to data from Baker Hughes Inc., an oil-services company. The rig count has declined by more than half since December.
Crude’s rebound may be short-lived as supplies stay near the highest level since 1930, said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC.
“With overall crude inventories over 490 million barrels, it’s hard to feel that the market rise is sustainable,” Finlon said.
The Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world’s oil, has so far resisted calls to cut output.
Technical specialists from Russia, Mexico and Oman will confer with their OPEC counterparts May 12 and May 13, said two people who asked not to be identified because the discussions are private. The meeting was suggested by Venezuela, which has urged the 12-member group to revive prices by reducing output.
OPEC’s ministerial gathering is scheduled for June 5 and the chances of the group agreeing to a joint production cut with non-members are limited, according to Commerzbank AG. Saudi Arabia, the world’s biggest oil exporter, led the group’s decision in November to maintain its collective quota at 30 million barrels a day.

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