Oil Prices Up As EIA Confirms Crude Draw

Gold, Silver, Copper and Crude Oil Briefing

Oil prices edged up on Wednesday, lifted by tensions in the Middle East and healthy demand, although rising United States output continued to weigh on markets.

The International Energy Agency said last week that Venezuela, where an economic crisis has cut oil production by nearly half since early 2005 to well below 2 million barrels per day (bpd) PRODN-VE , was "clearly vulnerable to an accelerated decline", and that such a disruption could tip global markets into deficit.

"I think there are conflicting views on the USA crude stockpiles and we should wait for the EIA data to confirm the decline", said Hyundai Futures' Yun.

Traders also kept a close eye on the Federal Reserve, which raised interest rates for the first time in 2018 and upgraded its outlook for economic growth after the conclusion of a two-day meeting Wednesday afternoon.

"Tensions between Saudi Arabia and Iran gave prices some support", said Sukrit Vijayakar, director of energy consultancy Trifecta in a note.

The country's February output was down by more than half a million barrels compared with a year ago, according to International Energy Agency data last week.

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Soaring US output, as well as rising output in Canada and Brazil, is undermining efforts by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) to curb supplies and bolster prices.

Trump could withdraw the US from the historic nuclear deal with Iran, and impose sanctions on the country, which then would make it harder for Tehran to export crude and oil products to the global market. Still, investors will be wary of US supplies, which have threatened to undermine OPEC's efforts to eliminate a global glut. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up by 1% at $62.75 a barrel.

First, OPEC can not contain broader macro events, as we saw in early February, nor does it really have any control over output in several countries that fall under the auspices of the Declaration of Cooperation.

WTI is now trading above $62.60.

This is in stark contrast to a Bloomberg survey in advance of the government report showing a 3.25 million barrel rise in stockpiles.

The Energy Information Administration will issue its weekly update on US petroleum supplies Wednesday. Prices rose $1.37, or 2.1 percent, to $67.42 on Tuesday. April heating oil rose 2.4% to $1.952 a gallon.

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