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By Bloomberg

Oil headed for the biggest monthly advance since May 2009 amid speculation a shale boom that’s contributed to a record U.S. supply glut is ending.

Futures were little changed in New York, having risen 23 percent in April. Crude stockpiles at Cushing, Oklahoma, shrank for the first time since November, while production was near a six-week low, the Energy Information Administration reported Wednesday. This followed the agency’s prediction April 13 that output from tight-rock formations will decline in May, the first time it’s forecast a drop.

Oil is sustaining a rebound from a six-year low in March as drillers in the U.S. reduced the number of active rigs to the fewest since October 2010, adding to signs that the surplus will ease. While the rally may still falter with crude inventories nationwide at the highest level in 85 years, speculators have abandoned hedges on an exchange-traded fund at a record pace.

“It’s supply-driven sentiment,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “When you see rig counts falling and shale production slowing, then you have a changing shift in where the market is going.”

West Texas Intermediate for June delivery was at $58.66 a barrel in electronic trading on the New York Mercantile Exchange, up 8 cents, at 1:40 p.m. Sydney time. The contract climbed $1.52 to $58.58 on Wednesday, the highest close since Dec. 11. Total volume was about 40 percent below the 100-day average. Prices have increased 10 percent in 2015.

Cushing Supplies

Brent for June settlement was 29 cents lower at $65.55 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.90 to WTI.

Crude stockpiles at Cushing, the delivery point for New York-traded contracts and the largest U.S. storage hub, slid by 514,000 barrels to 61.7 million through April 24, according to the EIA. Total inventories expanded to 490.9 million, the highest level since 1930, based on monthly records from the Energy Department’s statistical arm dating back to 1920.

The U.S. oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale plays including the Permian and Eagle Ford in Texas and the Bakken in North Dakota. Output from those formations will decline 57,000 barrels a day next month, the EIA said in a drilling productivity report.

Drillers seeking oil in the U.S. cut the number of active machines to 703 through April 24, according to data from Baker Hughes Inc., an oilfield-services company. The rig count has decreased for 20 weeks.

Yemen Campaign

The Chicago Board Options Exchange Crude Oil Volatility Index has fallen 32 percent in April, poised for the biggest monthly drop on record. The gauge of hedging costs on the U.S. Oil Fund, the biggest exchange-traded fund tracking crude futures, closed at a four-month low last week.

Brent has gained 19 percent in April, also the most since May 2009, as a Saudi military campaign in Yemen bolstered concern that Middle East supplies may be disrupted.

Saudi Arabia, the world’s largest crude exporter, has deployed National Guard troops to its southern borders, a month after leading airstrikes on Shiite Houthi rebels in its neighbor’s civil war. Coalition forces said Wednesday they bombed a runway at the international airport in Sana’a to deter an Iranian plane from violating Yemeni airspace.

Yemen’s location at the Bab el-Mandeb, a chokepoint in international shipping, makes it important for global energy trade, according to the EIA. Closing it would force oil tankers to sail around Africa to reach Europe and the Americas.