Crude oil prices gathered more steam in early Asian trade Wednesday after settling at this year's highs overnight, driven by prospect of a dwindling glut. On the New York Mercantile Exchange, light, sweet crude futures for delivery in June CLM6, +1.04% traded at $44.56 a barrel, up $0.53, or 1.2%, in the Globex electronic session. June Brent crude LCOM6, +1.14% on London's ICE Futures exchange rose $0.56, or 1.2%, to $46.30 a barrel. Overnight, both benchmarks settled highest since Nov.10 and rose even more in the post-settlement trade after the American Petroleum Institute reported U.S. crude inventories likely decreased by 1.1 million barrels last week. Persistent surplus in the physical market has kept a lid on oil prices for almost two years. Despite the recent rally, prices are still much lower than the $100 mark back in mid 2014. Any indication of ebbing supply will boost risk-taking sentiment and drive prices higher. A survey of 14 analysts by The Wall Street Journal expects crude stocks to have risen by 1.7 million barrels, on average, in the week ended April 22. Gasoline stockpiles are expected to fall by 1.2 million barrels while stocks of distillates, which include heating oil and diesel, are expected to fall by 100,000 barrels, according to analysts. Official data from Energy Information Administration is due at 10:30 a.m. EDT Wednesday. "Rebounding oil prices have buoyed global equity market sentiments. This could continue in the months ahead. More evidence has surfaced about structural oil supply destruction, especially in the U.S., while global demand continues to set new highs, led by China and U.S. gasoline consumption," said Gordon Kwan, the head of regional oil and gas research at Nomura. In March, China's crude import rose 22% on-year, reached 32.6 million metric tons or 7.7 million barrels a day. As the government continues to fill up its strategic reserves as well as grant more importing licenses to local independently-owned refiners known as teapots, China's thirst for foreign crude will stay elevated, analysts said. "We attribute this increase to strong demand from independent teapot refineries and attractive margins for certain light products, notably gasoline, which fuelled refiners' appetite for processing crude," said BMI Research. Moreover, strong domestic gasoline demand will be a major driver of overall Chinese crude demand as low prices and the rising number of vehicle ownership translate to greater fuel usage on the roads, the firm added. In the near term, market participants will be watching the outcome of the U.S. Federal Reserve policy meeting later today. The Fed could drop hints after its meeting about future interest-rate increases and the strength of the U.S. economy. Nymex reformulated gasoline blendstock for RBM6, +0.84% May — the benchmark gasoline contract —rose 149 points to $1.5809 a gallon, while May diesel traded at $1.3474, 149 points higher. ICE gas oil for May changed hands at $401.25 a metric ton, up $4.25 from Tuesday's settlement.
