Oil prices “pushing up against technical resistance”: Analyst
On Wednesday, oil prices looked like they were going to end their longest streak of gains in 2017, as traders weighed the Energy Information Administration report showing the first weekly decline in US crude supplies in a month against increasing US crude production.
WTI crude futures were down 29 cents to $53.11/barrel on the New York Mercantile Exchange. On Tuesday, prices had settled at their highest level in about a month-and-a-half, marking a sixth straight session climb. Analysts were anticipating that major oil producers were set to agree on an extension of the OPEC supply cut deal into the second half of the year.
Brent crude settled down 37 cents to $55.86/barrel.
The EIA reported that domestic crude supplies fell by 2.2 million barrels during the week ending April 7, a downward shift from three straight weeks of gains reported by the agency.
On Tuesday, the American Petroleum Institute reported a 1.3 million-barrel decline.
“As imports remain crimped from the Middle East amid the OPEC production cut deal, a draw has appeared earlier in April than we have typically come to expect,” Matt Smith, director of commodity research at ClipperData told MarketWatch.
The EIA also reported gasoline supplies fell by 3 million barrels, while distillate stockpiles were down by 2.2 million barrels last week.
On Nymex, May gasoline fell by a penny to $1.748 a gallon, while May heading added less than half a cent to $1.654/gallon.
May natural gas rose 2.8 cents to $3.179 per million Btu ahead of a weekly supply update expected on Thursday.
Despite inventory declines, oil prices did not find much support.
“Price action after an EIA report is quite tricky,” Troy Vincent, an oil analyst at ClipperData told MarketWatch.
Prices are “pushing up against technical resistance” after recent gains, he said. “This helps dampen the influence of the fundamental numbers coming from the EIA.”
In its March report released on Tuesday, OPEC raised its 2017 forecast for supply growth in the US by 200,000 b/d.
“OPEC’s production cut has fanned a recovery for the U.S. shale oil industry,” Naeem Aslam, chief market analyst at Think Markets, told MarketWatch. Saudi Arabia, the cartel’s biggest producer of oil “has already suggested that the cartel should expand its production cut beyond its current expiry date.”
In the EIA’s short-term outlook report released on Monday, the agency said it expects to see record US oil production in 2018.