By April 26, 2017 Read More →

Oil prices boosted on US crude stock data

Oil prices

Oil prices rose in trading on Wednesday following an EIA report showing a decrease in US crude stocks. Linn Energy photo.

Oil prices rise after EIA reports crude stocks down 3.6 million barrels

Oil prices rose in trading after data released by the US Energy Department showed a larger-than-expected drop in US crude inventories.

According to the US Energy Information Administration, crude stocks fell by 3.6 million barrels last week, doubling analysts’ expectations and helped boost the market.

US WTI was up 37 cents to $49.93/barrel and Brent crude rose 11 cents to $52.21/barrel by 11:31 a.m. EDT.

Oil prices were supported by comments by Saudi Energy Minister Khalid al-Falih, who said he was interested in talks involving OPEC and non-OPEC members aimed at stabilizing prices.

OPEC and non-OPEC members participating in the supply cut agreement will meet at the end of May to determine if the pact will be extended to the end of the year.

Despite Saudi Arabia’s optimism, analysts are concerned that Russia may not participate in the extended agreement.

“The market remains heavy with doubts about OPEC’s ability to achieve a successful extension of the current deal with Russia adopting a lukewarm ‘wait and see’ approach,” Ole Hansen, head of commodity strategy at Saxo Bank told Reuters.

As well, Thomson Reuters Eikon shipping data showed 50 million b/d were booked for shipment on tankers in April, an increase of 10 per cent since December.

Last week, gasoline and distillate inventories grew along with US production and imports, which analysts say will make the pathway to higher prices bumpy.

Analysts are concerned that weak gasoline demand could weigh on crude prices in the coming weeks if consumption continues to fall.  Latest EIA data showed January sales of gasoline by refiners dropped by 6 per cent from one year ago.

Despite the drop in demand, refining capacity utilization rose to 94.1 per cent, the highest since November of 2015.  Gasoline inventories now sit at 241 million barrels, or similar levels at this time last year which led to narrow refining margins.

“Refiners are obviously cranking out large volumes of refined products now, and are facing a lackluster gasoline demand environment,” John Kilduff, partner at energy hedge fund Again Capital LLC told Reuters.




Posted in: Energy Financial

Comments are closed.