WASHINGTON (DTN) -- With exception of ULSD, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled higher Wednesday, rallying late session on comments from Algeria's energy minister, the president of Organization of the Petroleum Exporting Countries, that OPEC and key non-OPEC partners are closing in on a deal to cut as much as 10 million barrels per day (bpd) in collective supplies when they meet Thursday and Friday for an emergency meeting.
Lending additional support for West Texas Intermediate futures, weekly inventory data released midmorning by Energy Information Administration showed U.S. crude production dropped 600,000 bpd from a near record high to 12.4 million bpd last week, a rapid response by domestic producers to multi-year low oil prices and collapsing demand.
NYMEX WTI June futures jumped $1.46 or 7% in market-on-close trade to $25.09 barrel (bbl) and ICE Brent June futures climbed $0.97 to $32.84 bbl. NYMEX RBOB May futures rallied 2.98 cents to a $0.6780 gallon settlement, shrugging off another week of sizable inventory gains in gasoline stocks and record low demand for the motor transportation fuel.
EIA data reported implied gasoline demand plunged 24% to 5.064 million bpd last week, with the two-week decline at 42.7% -- the largest on record. On the back of battered consumption, nationwide gasoline stockpiles spiked 10.5 million bbl to 257.3 million bbl.
NYMEX ULSD May futures settled 1.68 cents lower at $1.0107 gallon after data showed distillate demand fell 100,000 bpd to 3.807 million bpd during the week ended April 3 and supplies increased 600,000 bbl.
Total U.S. crude and petroleum stockpiles rose by a staggering 33 million bpd in the reviewed week, with crude build accounting for 15.2 million bbl of that increase.
Algerian Energy Minister Mohamed Arkab signaled Wednesday a group of 30 plus oil producers are in the final stages of talks on a new supply agreement aimed at balancing the market.
"The meeting will undoubtably be fruitful in order to rebalance the market through measures we will take tomorrow," said the current OPEC president.
Market focus remains on the potential deal that is likely to include 10 million bpd in production cuts, with OPEC and Russia shouldering as much as 8 million bpd of the reduction. Additional parties in the agreement may include Norway, Brazil, Argentina, and Canada.
While some are hoping that the United States may join in the cuts, a formal agreement between the United States and other oil producers appears unlikely due to U.S. laws, while domestic operators are already scaling back output due to punishing market conditions. The United States will take part in a meeting Friday with G-20 energy ministers meeting aimed at restoring calm to the global energy markets.
EIA projected global oil demand would fall sharply this year as a result of the coronavirus pandemic, down to 95.52 million bpd from 101.85 million bpd in its previous forecast.
"If realized, 2020 would see the largest year-over-year percentage decline in global oil consumption since at least 1990, the year EIA began tracking global consumption levels," said EIA.
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