API Data Mixed, Saudi's Reduce Supply to Asia
- Author: Zachary Reyes May 18, 2017,
May 18, 2017, 10:40
Weekly US data on crude production and inventories, plus monthly reports on supply and demand from OPEC and the US Energy Information Administration (EIA) this week, should provide a more detailed picture of how quickly global crude inventories are falling.
While US oil inventories fell, the country's crude oil production continued to rise, jumping above 9.3 million bpd last week, in what is now a more than 10 per cent increase since its mid-2016 trough.
For the week ending on May 3, crude oil inventories plunged 5.25 million barrels, missing analysts' expectations for a draw of 1.79 million barrels.
Oil Storage Tanks at Cushing, OKOil held gains before government data forecast to show us crude stockpiles fell for a fifth week, further reducing an inventory surplus.
U.S. West Texas Intermediate (WTI) crude oil futures were trading at $47.46 per barrel, up 13 cents, or 0.3 percent from the last settlement.
Crude futures eked out more gains in Asia on Thursday as investors are interpreting the latest hefty decline in US crude inventories to be a harbinger of future demand.
For the year to date, the price of a barrel of WTI is down 18.7% and the price of Brent crude is down 16.8% per barrel.
But after Brent prices fell back below $50 per barrel last week, analysts said producers felt forced to act.
Oil was also buoyed by a Reuters report on Wednesday that Saudi Arabia would cut crude supplies to Asia.
"Higher oil production from the United States, along with rising oil output from Canada and Brazil, is expected to curb upward pressure on global oil prices through the end of 2018, said EIA acting administrator Howard Gruenspecht in a statement".
The following month, 11 non-OPEC oil-producing countries pledged to cut an additional 558,000 barrels a day, reaching an overall reduction of 1.8 million.
Also supporting prices were comments from Algeria's energy minister that Algeria and Iraq favor extending global supply cuts when OPEC meets this month.
An increased likelihood of an extension of production cut by Opec and non-Opec allies beyond June is only strong factor, which can halt ongoing decline.
At 522.5 million barrels, crude inventories are at their lowest since February.
US crude oil production C-OUT-T-EIA has already risen by over 10 percent since its mid-2016 trough, to more than 9.3 million bpd, close to levels of top producers Russian Federation and Saudi Arabia.
"While OPEC is trying to cut production, Libyan output is at its highest level since October 2014 and US shale oil has added 800,000 barrels to the market", he said.