Oil punches through $50 U.S. a barrel as world demands more crude
15 September, 2017, 00:19 | Author: Darnell Patrick
"Stronger demand and supply restrictions from OPEC and Russian Federation are the main reasons for the oil price upsurge", said Forex.com analyst Fawad Razaqzada.
Brent's large premium over the US benchmark "is the most telling signal that USA crude oil markets need more time to return to normal in the wake of Hurricane Harvey", IHS Markit said in a note Wednesday.
"We don't expect a spike up in prices nor do we expect a big drop in prices".
Early Wednesday, the U.S. Energy Information Administration said domestic crude supplies climbed (http://www.marketwatch.com/story/eia-reports-smaller-than-expected-rise-in-us-crude-supplies-output-climbs-2017-09-13) by 5.9 million barrels for the week ended September 8.
The agency, which coordinates the energy policies of industrial nations, raised its 2017 global oil demand growth estimate to 1.6 million barrels per day from 1.5 million bpd. As of March 2017, 49% of total US working crude oil storage capacity and more than 40% of working storage capacity for both motor gasoline and diesel fuel were located in the Gulf Coast region.
But in August, for the first time in four months, OPEC finally managed to follow through on its promises when its production fell from the previous month's totals.
Meanwhile, the International Energy Agency said in its latest monthly report that the global market is starting to tighten due to robust demand and a drop in output from both the OPEC and other producers.
Industry and government oil products stocks stood at 1,796.3 million barrels at in July in the 34 countries that make up the Organisation for Economic Cooperation and Development.
Brent crude LCOc1 fell 11 cents to $54.16 a barrel, while the West Texas Intermediate (WTI) CLc1 dropped 5 cents to $48.18, reported Reuters.
Earlier Wednesday, the EIA reported that USA crude stocks rose by 5.9 million barrels for the week ended September 8 while domestic United States crude output jumped by 572,000 barrels a day to 9.353 million barrels as more wells came back on line after the storm.
"OECD demand growth continues to be stronger than expected, particularly in Europe and the USA", the Paris-based IEA said.
"On the one hand, the smaller-than-anticipated crude [supply] build, coupled with large draws to product stocks should provide support to crude prices, but continued weakness in refinery demand and rebounding production could serve to overshadow this signal", Troy Vincent, oil analyst at ClipperData, told MarketWatch.
Crude palm oil prices advanced by 0.53 per cent to Rs 550 per 10 kg in futures trading today driven by strong demand in spot markets.
Oil is higher for the fourth day in a row as the USA refinery industry restarts after Harvey. "Undoubtedly this boost in demand will contribute to further reductions in commercial oil inventories", he said.
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