Oil prices rising as United States crude supplies drop

Andrew Cummings
April 12, 2017

Brent is up for a seventh consecutive session, while WTI has risen for six straight days.

- Reuters picNEW YORK, April 11 ― Crude oil eased from a five-week high today as rising U.S. shale oil production offset concerns over geopolitical tensions in the Middle East and output cuts being made to support prices.

Brent for June settlement was down 3 U.S. cents at US$55.95 a barrel on the London-based ICE Futures Europe exchange, after rising 74 USA cents to US$55.98 on Monday.

US crude inventories have climbed to 535.5 million barrels, the highest in weekly data compiled by the EIA since 1982.

The May futures for WTI oil gained 0.26% and reached $53.54 per barrel at the New York Mercantile Exchange (NYMEX).

USA crude inventories have touched record highs at both the USA storage hub of Cushing, Oklahoma, and in the US Gulf Coast in recent weeks, according to US government data.

Analysts said there are worries demand growth could falter, and other indicators were warning that the market had not yet cleared enough of its surplus to keep prices rising.

"I wouldn't be surprised to see a bit of book squaring going on now, ahead of the USA inventory data which is due on Thursday morning Asia time", he said, also noting that current prices have attracted shale oil producers in the past. While total supplies may have started to fall last week, stockpiles at Cushing in Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, probably rose by 800,000 barrels, according to a forecast compiled by Bloomberg.

"Geopolitical tensions and a shutdown at Libya's largest oilfield continue to support crude".

Tensions in the Middle East are also supporting prices, after last week's US missile strike on a Syrian air base.

While Syria produces only small volumes of oil, the Middle East is home to more than a quarter of the world's oil output.

Additional support also came from expectations of strong demand as the USA summer driving season kicks in. That as daily output there has already moved back above 9 million barrels the past seven weeks, drilling activity continues to increase and United States oil stockpiles sit at record highs.

Oil traded near $53 a barrel after the longest winning streak since December before US government data forecast to show record crude stockpiles declined.

The gain in oil prices comes despite rising USA shale oil production.

In a sign of OPEC confidence that the deal is working, Kuwait's oil minister said he expected producers' adherence in March to their supply cut pledges to "be higher than the previous couple of months".

Other reports by iNewsToday