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(Bloomberg) — Oil headed for the first weekly gain in three weeks amid the lowest trading volatility since December.
Futures advanced as much as 0.8 percent in New York and are poised for a 2.8 percent gain through March 6. The CBOE Crude Oil Volatility Index, which measures price fluctuations using options of the U.S. Oil Fund, ended at 47.09 on Thursday, the lowest level since Dec. 11. Supply continues to increase from the U.S. to Venezuela, adding to a global glut. Swelling U.S. inventories contributed to an oversupply that drove prices almost 50 percent lower in 2014. Saudi Arabia has raised its pricing to Asia, signaling demand is improving, after leading a decision in November by the Organization of Petroleum Exporting Countries to maintain output and defend market share against shale producers. “It appears the market is seeing through the ongoing build in supply,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “It’s pretty clear that there’s a global game going on here and that the marginal producers are very likely to feel the blowtorch.”
West Texas Intermediate for April delivery climbed as much as 42 cents to $51.18 a barrel in electronic trading on the New York Mercantile Exchange and was at $51.15 at 12:46 p.m. Sydney time. The contract slid 77 cents to $50.76 on Thursday. The volume of all futures traded was 81 percent below the 100-day average. Prices are down 4 percent this year.

Global Supply

Brent for April settlement was 39 cents higher at $60.87 a barrel on the London-based ICE Futures Europe exchange. Prices are down 2.7 percent this week. The European benchmark crude was at a premium of $9.72 to WTI, from $12.82 on Feb. 27.
Venezuelan production is nearing 3 million barrels a day, Oil Minister Asdrubal Chavez said on state television Thursday. The OPEC nation’s output was last above that rate in January 2001, according to data compiled by Bloomberg. OPEC pumped 30.6 million barrels a day in February, led by gains from Saudi Arabia, the world’s biggest crude exporter, the data show. It was the ninth straight month that the 12-member group has produced more than its collective target of 30 million barrels a day.
State-owned Saudi Arabian Oil Co. said this week it will sell cargoes of its Arab Light crude to Asian customers in April at 90 cents a barrel below the regional benchmark. That narrows the discount by $1.40 from March, the biggest price increase since January 2012, according to data compiled by Bloomberg. U.S. crude stockpiles rose by 10.3 million barrels last week to 444.4 million, the Energy Information Administration said Wednesday. That’s the biggest increase by volume in almost 14 years to the highest level in weekly data compiled by the Energy Department’s statistical arm since August 1982.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Aaron Clark