Oil prices rose following EIA data release
Oil prices rose on Wednesday after the US Energy Information Administration released data showing a larger-than-expected drop in US crude stocks last week and Iraq and Algeria announced they support an extension to the OPEC supply cut pact.
The EIA reported US crude inventories fell by 5.2 million barrels last week, significantly more than the 1.8 million-barrel decline anticipated by analysts. Gasoline and distillate stocks also fell.
Brent crude was up $1.34 to $50.07/barrel by 11:35 a.m. EDT. US light crude was up $1.43 to $47.30/barrel.
Along with decreased crude stocks, oil prices were boosted by comments from Algeria’s energy minister on Wednesday. Nouredine Bouterfa said his country and Iraq agree the OPEC supply cut pact should be extended.
OPEC meets later this month to determine if the pact will be extended to the end of the year. Earlier in the week, Saudi Arabia’s Oil Minister Khalid al-Falih said the agreement may even be prolonged into the first quarter of 2018.
Despite Wednesday’s increase in price, some analysts remain concerned about the still-bulging US and global crude stocks.
“U.S. crude oil production is now solidly above 9.3 million barrels per day with more to come, and refined product, especially for gasoline, is oddly weak,” John Kilduff, partner at hedge fund Again Capital told Reuters.
“It is difficult to see how the day’s gains last.”
Output from the United States, Libya and Nigeria has risen in recent weeks, undermining OPEC supply cuts.
Crude production in Libya was over 800,000 b/d for the first time since 2014 and it could rise to 1.2 million b/d later in the year. Nigeria is also expecting a bump in oil production as soon as Shell tests the Trans Forcados oil export pipeline before restarting the line.
