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Oil holds gains above $49 as US crude stockpiles extend drop

Aug 10 2017 08:50
Ben Sharples, Bloomberg

Hong Kong - Oil held gains above $49 a barrel as US production eased and crude inventories extended declines, trimming a glut.

Futures rose in New York after climbing 0.8% on Wednesday. Output slid for the second time in three weeks, according to Energy Information Administration (EIA) data, while stockpiles dropped by 6.45 million barrels, almost triple the median forecast in a Bloomberg survey. Gasoline inventories unexpectedly rose for the first time since early June.

Oil has fluctuated below $50 a barrel for more than a week as investors weigh rising global supply against output cuts by members of the Organisation of Petroleum Exporting Countries and its allies including Russia. While US crude stockpiles have declined during a period of strong seasonal demand, they remain almost 90 million barrels above the five-year average.

“Everything seems to be pointing to a tightening in the US market, which is a positive, but it’s obviously moving at a relatively slow pace,” said Daniel Hynes, an analyst at Australia & New Zealand Banking in Sydney. “Oil is heading in the right direction for slightly higher prices, but it’s moving at glacial speeds.”

West Texas Intermediate for September delivery was at $49.76 a barrel on the New York Mercantile Exchange, up 20 cents, at 2:20pm in Hong Kong. Total volume traded was about 30% below the 100-day average. Prices rose 39c to $49.56 on Wednesday, the first gain in three sessions.

Brent for October settlement rose 25c to $52.95 a barrel on the London-based ICE Futures Europe exchange. The contract rose 56c to $52.70 on Wednesday. The global benchmark crude traded at a premium of $3.01 to October WTI.

US crude production dropped by 7 000 barrels a day to 9.42 million barrels a day last week, the EIA reported on Wednesday. Gasoline inventories expanded by 3.42 million barrels, the biggest weekly advance since January.

Oil-market news:

• OPEC and its allies invited nations including Iraq and the United Arab Emirates to a joint technical committee meeting to be held in Vienna on August 21, according to two people familiar with the matter.

• Saudi Arabia’s Crown Prince Mohammed bin Salman discussed economic and energy investment opportunities with Iraqi Oil Minister  Jabbar al-Luaibi in Jeddah, the state-run Saudi Press Agency reported.

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commodities  |  markets  |  oil

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