USA oil trims losses as crude supplies fall for third straight week

Lloyd Doyle
October 13, 2017

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

Inventories of US crude fell by roughly 2.8m barrels in the week ended October 6, handily beating expectations of a draw of 2m barrels.

Brent crude futures, the global benchmark for oil prices, were trading at $56.75 per barrel at 0649 GMT, up 14 cents, or 0.25 percent, from their last close. Though Brent and WTI futures were responding negatively to the crude stock-build reported by the API early Thursday, the market will be looking to the corresponding EIA data later in the day for validation.

A monthly oil report by the International Energy Agency (IEA) predicted global demand will grow by 1.6m barrels per day (bpd) in 2017 and 1.4m bpd in 2018.

In refined products, attention will gradually transition to distillates, but the product's stock data will not come fully into focus as a driver of overall market sentiment until the peak of winter, when heating oil consumption in the U.S. rises. Platts survey showed analysts expecting a draw of 1.4 million barrels in gasoline and a draw of 1.64 million barrels in distillate stocks.


Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt, said the tone of the IEA report was bearish because it suggested that demand for OPEC crude next year would not be sufficient to absorb all the available supplies.

A US federal holiday on Monday delayed the release of weekly inventory numbers by a day. This likely means OPEC must deepen its production cuts to finish its job of bringing oil stocks back to the five-year average.

In May, Opec and non-Opec members agreed to extend production cuts of 1.8m barrels per day for a period of nine months until March 2018 but rising production from the U.S., Nigeria and Libya has undermined the oil cartel's efforts to curb excess supply.

Meanwhile, the agency forecast that USA oil demand for 2017 is set to grow by 230,000 bpd compared with previous forecast of 350,000 bpd.

Traders have expressed concerns of late that the United States will at some point reach its export capacity, though that has not been hit yet. For 2018, oil demand is expected to rise by 420,000 bpd vs 400,000 bpd previously.

Other reports by Iphone Fresh

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