Now oil prices are nearing $51 as USA inventories drop

Business

Now oil prices are nearing $51 as USA inventories drop

27 July 2017, 02:43

Crude inventories fell by 7.2 million barrels in the week to July 21, compared with analysts' expectations for a decrease of 3 million barrels, the Energy Information Administration said today.

The latest API data recorded a much larger than expected inventory draw of 10.2 million barrels, although there was some disappointment that gasoline stocks increased.

US crude futures were up 29 cents to $48.17 a barrel as of 11:03 a.m. EDT (1503 GMT) after hitting a high of $48.87 a barrel, while Brent crude rose 18 cents to $50.40 a barrel, retreating from a session high of $51.06 a barrel. On the same day, U.S. crude oil active futures rose 1.6%.

Kuwait joined the United Arab Emirates in promising to pump less oil after Saudi Arabia called on fellow OPEC producers to cut more supply to help curb the global glut. Last week, OPEC formally agreed to extend the current deal to cut oil production by 1.8 million barrels per day until March 2018. The UAE consumes less than a third of its total crude oil production-so it is unclear, assuming it continues to overproduce, exactly what the UAE intends on doing with the 10 percent it is shaving off its September exports.

WTI oil prices are forecast at $48.95 per barrel in 2017 and $49.58 per barrel in 2018, according to the EIA.

Oil has traded below $50 a barrel since May amid concern that rising global output will offset reduced flows from members of the Organization of Petroleum Exporting Countries and its allies including Russian Federation.

However, gasoline inventories increased, the report stated.

EIA reports that ethanol exports have also been on the rise, particularly through the first four months of 2017. The growth in imports comes on the back of higher refinery runs after a maintenance period, as well as dwindling local crude production.

For distillate inventories including diesel, the EIA reported a fall of 2.9 million barrels. USA gross ethanol exports averaged 96,000 b/d, a 40 percent higher figure than was seen during the same period the year before.

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