Oil prices rebound amid United States inventory data

Geneva Matthews
September 23, 2017

New York- Oil prices rose on Wednesday in spite of a rise in US crude inventories with the market heading for its largest 3rd quarter gain in 13 years after the Iraqi oil minister said OPEC and its partners were considering extending or deepening output cuts. The recovery in United States refinery demand after Hurricane Harvey and optimism around tightening global crude oil supply and demand also helped oil prices.

The International Energy Agency in its latest monthly report said commercial OECD oil stocks stayed flat in July, month-on-month, at 30.016 million barrels, about a 190 million barrels above Organization of the Petroleum Exporting Countries' target of the last five year average.

Opec and non-Opec producers including Russian Federation have agreed to reduce output by about 1.8 million barrels per day (b/d) until March to reduce global oil inventories and support prices. Gasoline supplies dropped a third week to the lowest level since November 2015, while distillate stockpiles fell by the biggest amount since 2011, according to government data.

West Texas Intermediate rose 93 cents to settle at $50.41 per barrel, and Brent climbed $1.15 to $56.29 per barrel - the highest climb since March.

Brent crude futures settled 14 cents lower at $55.48 a barrel, near an nearly five-month high of $55.99 touched on Thursday.U.S.

According to him, this was caused by production and export of large volume of crude oil and natural gas by US: "So, the US has turned into a exporting country from importing country". The S&P Global Platts survey forecasts a fall of 800,000 barrels for gasoline and a 1 million-barrel draw for distillates.

Still, "refinery runs rebounded a solid 1.2 million barrels per day, in whole part due to returning refining activity on the U.S. Gulf", he said.

U.S. crude production reached 9.51 million bpd last week, up from 8.78 million bpd after Hurricane Harvey hit the U.S. Gulf late August. On September 19, 2017, Iraq's oil minister suggested that the production cut deal could be extended beyond March 2018.

Ministers from OPEC and its allies look set to keep everyone waiting longer for confirmation of further action to rebalance the oil market, sending conflicting signals on whether they'll discuss extending or deepening supply cuts in Vienna on Friday.

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