Oil Prices Rise on Falling Fuel Inventory

16 March, 2018, 01:02 | Author: Roderick Gutierrez
  • Traders work on the floor at the New York Stock Exchange in Manhattan New York

On Wednesday, the markets received some support when OPEC said that oil consumption was expected to grow by 1.62 million barrels per day (bpd) in 2018.

Moody's Investors Service has raised its medium-term price band for crude oil to US$45 (RM175.5)-US$65 per barrel from US$40-US$60 per barrel as continued Opec-led production restraint and strong global demand growth have contributed to declining global inventories, offsetting rapid increases in USA shale production. The IEA noted that even if Venezuela's production levels hadn't cratered over the past year, and it produced at the agreed upon level as part of the OPEC deal, the group would still be posting close to a 100 percent compliance level.

WTI Futures for April delivery were trading at $62.16 a barrel in Asia at 9:45pm ET, up 0.19%. for May delivery, traded in London, were up 0.20% at $65.62 per barrel.

While American Petroleum Institute figures showed a lower-than-expected build in crude stocks (+1.16m vs. +2.6M expected), this was not enough to stop prices from falling.

Brent crude futures LCOc1 were last down 13 cents on the day at $64.76 a barrel, while US West Texas Intermediate (WTI) crude futures CLc1 were up 1 cent at $60.97 a barrel.

Futures added 0.5 percent in NY, after rebounding from two days of declines on Wednesday. The effects of the production cuts of 1.2 mb/d (plus almost 0.6 mb/d from Russian Federation and other minor partners) had little effect in early 2017, likely because of the ramp up in production and exports just prior to the implementation of the deal.


The North African country, where militants disrupted oil production for months just a year ago, is now closing in on Saudi Arabia as the third-biggest source of seaborne supply to Europe after Iraq and Russian Federation, the International Energy Agency (IEA) said Thursday.

Crude has struggled to regain the highs of January after a broader market slump last month.

OPEC crude oil production edged lower in February to 32.1 mb/d, led by losses in Venezuela and the UAE. At the same time, crude oil throughput rose implying a need for more imports. That equates to year-on-year growth of 1.66 million barrels per day (mb/d).

However, gasoline stockpiles were down 6.3 million barrels, suggesting future demand for crude oil by refineries. The move could have implications for U.S. sanctions on Iran, which could impact the latter's oil industry and exports, Facts Global Energy and Royal Bank of Canada warned.

Looking at U.S. crude oil stocks, the most recent EIA figures (March 7) showed rising crude oil stocks and falling gasoline inventories. Without new sanctions, Monaldi expects Venezuelan production to drop by 300,000 to 350,000 b/d by the end of 2018, but if oil-sector sanctions are imposed, the decline could be as much as 400,000 b/d by the end of the year, he said.

Oil markets will enter the second quarter of 2018 with only a 75 million barrel surplus of refined products, down from 320 million barrels at the start of 2016.

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