Oil Prices Rise After API Reports Significant Draw In Crude Inventories

REUTERS

Brent crude futures, the worldwide benchmark for oil prices, were at $63.49 a barrel, up 8c. Brent had traded as high as $63.91 earlier in the day but fell back after Ineos, operator of the North Sea Forties pipeline, said the crack that shut it down had not spread. "At the beginning of the year, outlets like the EIA and IEA had very bullish predictions for shale output, with the EIA expecting US output to average 10 million barrels per day in 2018". Shale production will rise to a record in January, according to a government forecast published on Monday, as higher prices encourage increased drilling.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $57.35 a barrel at 0757 GMT, up 19 cents, or 0.3 percent, from their last settlement.

"This should ensure buying pressures remain at the fore of the Brent structure until the turn of the year at the very least", said Stephen Brennock of oil broker PVM.

Oil ticked up after reports that a missile was sacked at Riyadh from Yemen, but pared gains after Saudi Arabia said it intercepted the missile and no casualties were reported.

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Further price support has been coming from voluntary supply cuts by oil cartel Opec and a group of non-Opec producers including Russian Federation. "With OPEC's decision to extend cuts, we expect that OECD inventories will reach the 5-year trailing average (2.83 billion barrels) by 3Q18 and long-term average (2.7 billion barrels) by year-end 2018", Bernstein added.

The U.S. oil inventories, which is scheduled for release on Wednesday by the Energy Information Administration (EIA), is expected to show a fifth straight week of decline.

This means United States output is fast approaching that of top producers Russian Federation and Saudi Arabia, which are now pumping around 11-million and 10-million barrels a day respectively.

"The U.S. shale oil report issued late yesterday is on the bearish side", said Olivier Jakob, analyst at Petromatrix.

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