Oil prices rise on larger-than-expected draws in US crude, gasoline

Oil prices

Oil prices rose in trading on Thursday after settling down 3.7 per cent on Wednesday. Encana photo.

Oil prices up over 2 per cent

Oil prices rose by over 2 per cent on Thursday after data released by the US Energy Information Administration showed a larger-than-expected drop in US crude stocks, but despite the gains, some analysts cut price forecasts.

Brent crude futures were up $1.19 to $48.98/barrel by 11:19 a.m. EDT and US WTI crude futures were up $1.15 to $46.28/barrel.

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According to the US EIA, US crude stocks fell by 6.3 million barrels last week.  The EIA said stronger refining activity and reduced imports were factors in the drop.

Analysts had anticipated a drop of 2.3 million barrels.

Andrew Lipow, president of Lipow Oil Associates in Houston told Reuters “Inventories were better than the market anticipated and we’re seeing gains in crude and products futures as a result.”

Many analysts do not see the recent rise in prices as a sign that the market is rebalancing.  A number of investment banks have dropped their oil price outlooks on worries that the global glut could extend into next year.

Bank of America Merrill Lynch cut their outlook for crude prices this week, dropping Brent forecasts to $50 from $54 this year and $52/barrel from $56 in 2018.

Bernstein Research reduced its average Brent forecasts to $50/barrel for 2017 and 2018 from $60 and $70 previously.

Saxo Bank says it expects oil prices to rise up to around $55/barrel in the coming months, but expects lower prices at the end of the year and into 2018.

EIA data showed US gasoline stocks fell 3.7 million barrels last week, higher than analysts’ expectations of 1.1 million barrels.  Despite the drop, overall gasoline inventories remain about 6 per cent over seasonal averages.

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Posted in: Energy Financial

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