Oil Increases After Large Drop in U.S. Crude Oil

 

oil-rig

 

U.S. Crude Oil

On Thursday, oil increase for a second day, as sluggish greenback and an unexpectedly large decline in U.S. crude inventories encouraged investors ahead of next week’s meeting between Organization of the Petroleum Exporting Countries (OPEC) members and Russia to talk over supply.

Brent crude futures increased 38 cents to $47.21 a barrel by 0917 GMT (05:17 a.m. EDT), or a 3.2% increase so far this week, although U.S oil futures increased 41 cents at $45.75 a barrel.

On Wednesday, the U.S. Energy Information Administration (EIA) reported a 6.2 million barrel decline in crude oil inventories the previous week, the 2nd largest decline in a year.

The reduction, together with a more gentle outlook for U.S. monetary policy, overshadowed news, Russian oil production hit a new record beyond 11 million barrels per day this week and that Libya had exported its first oil cargo since at least 2014 from the port of Ras Lanuf.

“In a way, this strength is justified,” PVM Oil Associates strategist Tamas Varga said.

“It is also justified because of the upcoming informal OPEC meeting and it’s only logical that a few days before that meeting, shorts will start covering and yesterday’s stock figures provided the perfect excuse,” he said.

Oil got an extra boost from a decline in the dollar to its lowest against the yen <jpy=>in four weeks, following the U.S. Federal Reserve kept monetary policy  unmoved and indicated rates may surge more slowly than it had expected before.

A sluggish greenback makes energy imports inexpensive for oil-reliant nations,  whereas low U.S. rates mean credit will stay easier to come by.

The approaching week, the world’s biggest producers will meet in Algiers to discuss ways to stabilize the oil market, including a possible freeze in production, which is already at or near record peaks in countries like Russia and Saudi Arabia.

With worldwide output still higher than intake, analysts are looking for prices to remain broadly range bound.

In addition

On Thursday, crude prices held increase in Asia, as U.S. stockpile statistics aided additional upbeat demand views even as global oversupply persists.

Delivery of crude oil for November on the NYMEX increase 1.01 percent to $45.80 a barrel. On the ICE Futures Exchange in London, delivery  of Brent oil for November increased 0.94% to $47.27 a barrel.

Suddenly, West Texas Intermediate oil futures extended increase, surging to intraday peaks, in North American trade on Wednesday, after statistics presented that oil supplies in the U.S. surprisingly decline.

Deliveries at Cushing, Oklahoma, the key delivery point for New York Mercantile Exchange, crude increase by 0.526 million barrels last week, according to the report. Total U.S. crude oil inventories  raised at 504,6 million barrels as of last week, which the  U.S. Energy Information Administration considered to be “historically high levels for this time of year”.

The gasoline inventories dropped by 3.204 million barrels, in comparison to anticipations for a decline of 0.567 million barrels, while distillate stockpiles increase by 2.238 million barrels, compared to predictions for an increase of 0.250 million.

Oil traders continued to consider predictions that major oil producing nations will freeze output to support the market when they meet this coming week.

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