Oil prices rise despite record-high US crude inventories

Oil prices rose in trading on Thursday, despite the EIA reporting US crude stocks had grown to record highs last week. Apache photo.

Oil prices up over 1 per cent

Oil prices rose over 1 per cent in trading on Thursday, despite analysts’ concerns about the record-high US crude inventories.

Brent crude futures were up 61 cents to $54.97/barrel by 2:21 p.m. EDT. US WTI crude futures were also up, rising by 66 cents/barrel to $51.81. These gains put crude back on track for its best close since March 8 when a number of investors bailed from bullish positions due to oversupply concerns.

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Crude prices have been recovering since a sharp drop in March. As the US summer driving season approaches, gasoline inventories have been dropping and refinery runs are beginning to increase. However, the US Energy Information Agency reports crude stock inventories have risen to record-highs.

“It’s hard to justify the move on the on back of fundamentals,” Robert Yawger, director in energy futures at Mizuho told Reuters.

The EIA report released on Wednesday showed crude inventories rose by 1.57 million barrels, bringing total US stocks to 535.5 million barrels.

According to the EIA report, US oil production rose by 52,000 b/d to 9.2 million b/d.

Olivier Jakob of Petromatrix told Reuters “The U.S. crude oil production profile is a mirror image of where it was last year, when at the end of the second quarter, production was 600,000 b/d lower than at the start of the year and this year is going to be the opposite.”

“By the end of the second quarter, you could have U.S. production up by 1 million b/d.”

US crude exports have increased to a record 1.1 million b/d with most cargoes heading to Asia. Traders are seeing signs of a tighter market in the Far East mostly due to the OPEC supply cut pact.

Reuters reports the 350,000 b/d Syncrude oilsands project in Alberta will likely be back online by the beginning of May after being completely shut down following a fire at the facility.