Wednesday, 12 December, 2018

Falling US crude stocks, threats to Nigerian fuel infrastructure push oil up

Source U.S. Energy Information Administration Monthly Energy Review and Short Term Energy Outlook Source U.S. Energy Information Administration Monthly Energy Review and Short Term Energy Outlook
Nellie Chapman | 18 January, 2018, 14:08

Both contracts climbed to their highest levels since December 2014 this week with Brent reaching $70.37 on Monday and WTI up to $64.89 on Tuesday.

One of Russia's leading oil producers Lukoil said Russian Federation should start exiting the pact if crude prices remained at United States dollars 70 per barrel for more than six months.

Also, U.S. West Texas Intermediate (WTI) crude futures were at 63.93 dollars a barrel, up 20 cents or 0.3 per cent from their last settlement, while WTI hit a December-2014 peak of 64.89 dollars a barrel on Tuesday.

Moreover, emir of Kuwait Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah urged participating countries to continue to show faith in implementing the voluntary production adjustments in 2018, until the common objective of returning OECD (Organization for Economic Co-operation and Development) inventories to the five-year average is achieved and the supply-demand balance is restored.

Data from the American Petroleum Institute (API) on Wednesday showed a well supplied fuel product market, which could mean lower crude demand going forward.

Rashidi explained that the market is now stable enough to accommodate any issues that do not have a major impact on supply and demand, adding: "control of production will insure stability of the market more than any factor such as relations between countries".

"The upside is now limited for oil prices ..."

US refinery crude runs fell by 420,000 barrels per day (bpd) and refined product stocks rose, implying a well supplied market.

"Prices ... rallied on the back of noticeable de-stocking of crude inventories", said Fawad Razaqzada, market analyst at future brokerage Forex.com.

He said Saudi Arabia's Foreign Minister Adel al-Jubeir had expressed support for the idea during a visit to Brazzaville on January 8.

Norbert Ruecker, head of commodity research at Swiss bank Julius Baer, also said that "hedge fund expectations for further rising prices have reached excessive levels", threatening prices.

In Nigeria, the militant group Niger Delta Avengers threatened to launch attacks on the country's oil sector in the next few days.

Oil prices ended higher on Wednesday ahead of the release of US petroleum data that was expected to show a ninth straight weekly drawdown in crude inventories.

Official U.S. oil inventory and production data is due on Thursday from the Energy Information Administration (EIA).