US says oil inventories declined but not as much expected

by Douglas Stevenson Julio 10, 2016, 3:23

U.S. crude's West Texas Intermediate (WTI) futures settled up 27 cents at US$45.41, compared with an earlier drop to US$44.77 and a high of US$45.97. The report further revealed that refined product inventories - gasoline and distillate - both decreased from their previous week levels.

Instability in Nigeria and bargain hunting in the wake of a collapse in the previous session help push oil higher Friday, though the rally may be short lived.

U.S. commercial crude stocks fell by 2.22-million barrels to 524.35-million barrels, according to the Energy Information Administration (EIA).

"The API report modified expectations and when they were not met, oil sold off", said Williams.

However, he cautioned: "We still think there is a surplus in the market". The grade fell $2.29 to settle at $45.14 on Thursday, the lowest since May 10.

Asian benchmark Singapore gasoline margins GL92-SIN-CRK have slumped more than 86 percent this year to just $2.28 barrels, the lowest since the fourth quarter of 2013.

Only recently have pump prices begun to increase after a steep falloff.

Preliminary weekly data showed USA production fell by 194,000 barrels per day, primarily due to declines in Alaska's output. CVX, +1.67% facilities in the country, said Williams.

The oil complex pushed higher overnight before flipping into the red following the EIA's report of a modest crude drawdown. For frame of reference, market analysts calculate that for every 1% that supply exceeds demand, oil prices fall roughly 20-25% although the current market dislocation has already been priced in.

"We have been seeing pretty consistent declines in crude oil inventories and, with regards to that end of the market, that is pretty positive", Angus Nicholson, a markets analyst in Melbourne at IG Ltd., said by phone.

Government data Thursday will show U.S. crude supplies declined last week, according to a Bloomberg survey. Though the US economy appears to be in fairly rosy shape, the Fed is not expected to raise interest rates again soon.

The leading global management consultancy firm McKinsey Global Institute says its latest research "suggests lower long-term growth in demand for oil than previously forecast", and cautions the industry to take "a fresh, critical look at energy investments".

The time frame for that is hard to predict, he said, but it could be "as little as a couple of weeks, to a much as a couple of months".


TOP News

All not lost for Parramatta NRL top 8 bid

Por malas condiciones meteorológicas, CFK no podrá regresar a Santa Cruz

Nato will back 'ally' Kiev against Russia — Ukraine

US issues travel alert to Bangladesh after restaurant attack

Scores of bodies from South Sudan gunfire, Juba doctor says