Oil Inventories Fall More than Expected; Prices Rise
At 522.5 million barrels, crude stocks were the lowest since February.
According to the U.S. Energy Information Administration, crude inventories fell 5.2 million barrels last week, much more than the 1.8 million-barrel drop analysts had predicted.
While U.S. 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 percent increase since its mid-2016 trough.
Gasoline stocks USOILG=ECI fell 150,000 barrels, compared with expectations in a Reuters poll for a 538,000-barrel drop.
Calling on U.S. to join in the rebalancing of global oil market, OPEC said “a large part of the excess supply overhang contained in floating storage has been reduced and the improvement in the world economy should help support oil demand”.
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. USA light crude oil was up 68 cents at $48.01.
USA oil production continued to rise, jumping above 9.3 million bpd last week, the highest since August 2015.
International Brent crude futures were at $50.46 per barrel at 0438 GMT on Thursday, up 24 cents, or 0.5 per cent, from their last close.
“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”, EIA Acting Administrator Howard Gruenspecht said in a statement, reports CNBC.
But questions remain about the effectiveness of OPEC-led cuts, with OPEC member Libya saying production now exceeded 800,000 barrels per day (bpd) for the first time since 2014 and could rise to 1.2 million bpd later this year.
Oil prices pared gains on Thursday after the report was released to trade below $51 a barrel, below the $60 level that top OPEC producer Saudi Arabia would like to see.
Opec is due to meet later this month in the hope of striking a second deal to secure a year of production cuts.
Possibly also helping sentiment in trading on Wednesday is a Reuters’ report that Saudi Arabia, which has taken on the lion share of the cuts, is planning to reduce oil exports to Asia by about 7 million barrels in June.