Oil prices rise on lower United States crude inventories, global supply risks

by Ben Pena April 19, 2018, 1:48
Oil prices rise on lower United States crude inventories, global supply risks

OPEC's ministerial committee tasked with monitoring the group's supply-cutting deal with non-OPEC countries, led by Russian Federation, meets in the Saudi city of Jeddah on Friday.

The West Texas Intermediate (WTI) for May delivery increased 1.95 US dollars to settle at 68.47 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery added 1.9 dollars to close at 73.48 dollars a barrel on the London ICE Futures Exchange.

Brent crude oil futures (LCOc1) were at $72.17 per barrel at 0539 GMT, up 59 cents, or 0.8 percent, from their last close.

Crude inventories fell by 1.1 million barrels in the week to April 13, compared with analysts' expectations for a decrease of 1.4 million barrels. In its latest monthly Drilling Productivity Report, the EIA said that USA shale production is expected to increase by 125,000 bpd in May over April, with the Permian production surging by 73,000 bpd, Eagle Ford's-by 24,000 bpd, and the Bakken's by 15,000 bpd. Stockpiles of gasoline fell by 2.5 million barrels, outpacing the 450,000-barrel increase expected in a Bloomberg survey.

Crude stocks at the Cushing, Oklahoma, delivery hub for WTI fell by 1.1 million barrels, EIA said.

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On Tuesday, prices fell on profit-taking, a stronger U.S. Dollar and worries about increasing U.S. production ahead of Wednesday's U.S. Energy Information Administration's weekly inventories data.

The weekly measurement on demand may be "overstated", but "suggests that some driving season weeks in 2018 will see more than 10 million [barrels a day] in gasoline demand, unless there is a disincentive tied to a much more radical increase in gas prices", said Kloza. "This is driven by lower net imports, amid rocketing exports, and higher refinery runs, both offsetting the rise in oil production of around 1 million barrels per day year-on-year".

On Nymex, May gasoline rose 1.3% to $2.068 a gallon, while May heating oil gained 1.7% to $2.091 a gallon.

"Oil prices are holding near three-year highs (reached earlier in April) for the time being, and with inventories back in line with normal levels, the supply glut of the last few years appears to be over", said William O'Loughlin, investment analyst at Australia's Rivkin Securities. (CVX) executives in OPEC-member Venezuela comes in the midst of the nation's anticorruption crackdown.

Beyond voluntary supply restriction aimed at propping up prices led by the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) since 2017, O'Loughlin said falling output in Venezuela due to its political and economic turmoil was supporting prices.

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