By March 15, 2017 Read More →

Oil prices rise off Tuesday lows on IEA forecast of H1 crude supply deficit

Oil prices

Oil prices rose in trading on Wednesday, boosted by an encouraging IEA report. Chevron photo.

Oil prices up in trading on Wednesday

Oil prices rose over $1/barrel in trading on Wednesday following American Petroleum Institute’s report showing a surprise reduction in US crude stocks inventories along with the IEA forecast that the oil market will be re-balanced during the first half of 2017.

“For those looking for a rebalancing of the oil market the message is that they should be patient, and hold their nerve,” the IEA said in its monthly report.

The US Energy Information Administration reported US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 200,000 barrels from the previous week.

Brent futures rose 64 cents, or 1.3 per cent, at $51.56 a barrel by 1:15 p.m. EDT, its first increase in seven days. On Tuesday, the global benchmark settled at its lowest level since Nov. 30.

U.S. WTI crude was up 76 cents, or 1.6 per cent, at $48.48 per barrel, its first increase in eight days. US crude slid on Tuesday to its lowest since Nov. 29, erasing all its gains since OPEC agreed to cut crude output.

 

The IEA said while global inventories rose in January, if OPEC sticks to its production cuts, the market should see a deficit of 500,000 b/d in the first half of 2017.

In an interview with Reuters, Ole Hansen, head of commodity strategy at Saxo Bank agreed, saying”As long as OPEC stays on track and non-OPEC delivers on their agreed cuts, the market will continue to balance.”

Analysts say global stockpiles are continuing to rise because OPEC members boosted their production prior to the onset of the supply pact and an increase in US shale production.

Harry Tchilinguirian, global head of commodity strategy at BNP Paribas, told Reuters the IEA was encouraging calm among investors.

“It is really just words to assuage impatience in the market, highlighting it takes time for production restraints to filter through in the form of inventory reductions,” he said.

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