Published: Fri, October 13, 2017
Business | By Max Garcia

Crude Oil Steadies After EIA Inventories

Crude Oil Steadies After EIA Inventories

Brent crude oil was down 62 cents at $56.32 a barrel by 1:43 p.m. ET.

Oil prices rebounded from earlier losses, although they were still down on the session, after the Energy Department reported a larger-than-expected decline in USA inventories and a falloff in weekly production on Thursday. US light crude was down 67 cents to $50.63 a barrel. The API reported an increase of about 2.03 million barrels in distillate inventories for the week ended October 6.

OPEC and other producers including Russian Federation agreed a year ago to reduce output by 1.8 million barrels per day (bpd) to prop up prices and the cuts, from January, have helped drain inventories.

The price action in the crude oil markets on Thursday suggests investors were more concerned about future demand than the weekly inventories picture.

For 2018, it forecast WTI $50.57-up 2% from the previous outlook.

The Organisation for Economic Co-operation and Development's (OECD) commercial stocks fell 14.2m barrels in August to just over 3bn barrels, leaving the surplus 170m barrels over the five-year average, down from 318m barrels at the end of January. But traders say supplies remain ample despite these cuts, thanks in large part to surging US production.

This supports what I have been saying all along that prices are likely to remain rangebound until OPEC and other major producers vote to extend the production cuts beyond the May 2018 deadline and also decide to deepen those production cuts.

"Our forecast of global demand growth remains unchanged at 1.6 million barrels per day in 2017, or 1.6 percent, and 1.4 million barrels per day in 2018, or 1.4 percent", said the report.

The U.S. bank said oil supply and demand fundamentals meant it expected Brent to average $58 a barrel in 2018.

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