API Reports Seventh Large Crude Draw In Seven Weeks

API Reports Seventh Large Crude Draw In Seven Weeks

API Reports Seventh Large Crude Draw In Seven Weeks

The continued drop in U.S. crude oil inventories corresponded to a decline in USA production for the week ending January 5, coming in at 9.492 million bpd compared to the week prior of 9.782 million bpd. While soaring prices have prompted warnings - from Iran's oil minister to Goldman Sachs Group Inc. - of a fresh surge in US production, ministers from the United Arab Emirates, Iraq and Kuwait insist there's no need to change tack and the cartel will stick with its plan to restrain output for the rest of the year.

Tighter markets have lifted both crude benchmarks about 13 percent above levels in early December, helped by production curbs by OPEC and Russian Federation, as well as by healthy demand growth.

The agency previously said US output could reach 10 million bpd in February and 11 million bpd in 2019.

Despite this, analysts warned that the recent oil price rally, which has lifted crude by around 14 percent since early December, may be about to run out of steam. But the bank believes there will be a lag in the price response, which could allow prices to keep running up.

Gasoline stocks rose by 1.8 million barrels while distillate fuels stockpiles, which include diesel and heating oil, climbed by 609,000 barrels, the API data showed.

Morgan Stanley equity analyst Martijn Rats said Monday that strong capital flows into the oil market will occasionally push Brent prices into the $70-$75 range.

The United States Energy Information Administration (EIA), has attributed the current surge in oil prices to shutdown of the Forties Pipeline in the North Sea on December 11, as a result of a crack in the pipeline, which remained closed through December 30.

Backwardation encourages traders to buy oil futures because it gives them a chance to play the so-called roll yield, said Rats.

Money managers have raised bullish positions in WTI and Brent crude futures and options to a record, according to the U.S. Commodity Futures Trading Commission and the Intercontinental Exchange.

Markets may come under pressure from rising USA production, analysts say. All of those outcomes would put pressure on oil prices.

Related news

[an error occurred while processing the directive]