Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil rises more than one percent on bets U.S. inventories falling

Published 08/17/2017, 03:01 PM
Updated 08/17/2017, 03:01 PM
© Reuters. FILE PHOTO: Offshore oil platform is seen in Huntington Beach

© Reuters. FILE PHOTO: Offshore oil platform is seen in Huntington Beach

By Jessica Resnick-Ault

NEW YORK (Reuters) - Oil prices rose on Thursday as renewed attention was put on U.S. oil stockpile declines after an industry report suggested oil inventories at the Cushing, Oklahoma hub were declining.

Inventories at Cushing, the delivery hub for U.S. crude futures, declined more than a million barrels in the week to Aug. 15, traders said citing estimates from energy industry information provider Genscape.

In the latest week to Aug. 11 for which government data was available, Cushing inventories increased nearly 700,000 barrels.

Inventories in the United States are closely watched as the market grapples with a global supply glut.

Brent crude (LCOc1) settled up 76 cents, or 1.51 percent at $51.03 a barrel. U.S. light crude (CLc1) was 31 cents, or 0.66 percent, higher at $47.09 a barrel.

Both benchmarks fell more than 1 percent on Wednesday despite data showing that U.S. inventories last week fell the most in nearly a year. [EIA/S]

Energy Information Administration (EIA) data showed commercial U.S. crude stocks have fallen by almost 13 percent from their peaks in March to 466.5 million barrels. Stocks are now lower than in 2016.

U.S. oil output, however, is rising fast as shale producers take advantage of a recent increase in prices.

U.S. crude production rose 79,000 barrels per day (bpd) to over 9.5 million bpd last week, its highest level since July 2015, and 12.8 percent above the most recent low in mid-2016.

"Yesterday, the production number trumped the storage number, but it was still a draw of 9 million," said Bob Yawger, director of energy futures, energy futures at Mizuho. "There are some weaker shorts that are probably sold out and they want to get out."

Rising U.S. output has been undermining efforts by the Organization of the Petroleum Exporting Countries and other producers including Russia to drain a global fuel glut.

They have promised to restrict output by a total of 1.8 million bpd between January this year and March 2018.

William O'Loughlin at Rivkin Securities said that if inventory declines continued at the current pace, U.S. stocks would fall below the five-year average in two months.

"The pace of the declines indicates that OPEC production cuts are having an effect, although the current oil price suggests that the market is skeptical about the longer-term prospects for rebalancing of the oil market," he added.

© Reuters. FILE PHOTO: Offshore oil platform is seen in Huntington Beach

Brent prices are down almost 12 percent since OPEC and its allies began cutting production in January.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.