Oil Climbs After Surprise Drop in Industry Tally of US Supply
(Bloomberg) -- Crude rose in after-hours trading because an oil-industry assessment was said to show a larger-than-expected contraction in U.S. crude stockpiles.
Futures extended gains from the settlement in New York after the American Petroleum Institute was said to have reported domestic oil inventories slid by 5.2 million barrels last week. That exceeded the 3.15 million-barrel decline forecast in a Bloomberg survey. If the drop is confirmed by the government on Wednesday, it will aggravate tightening supply conditions stemming from the shutdown of a key North Sea pipeline.
“This is continuing the trend of these larger-than-consensus and larger-than-seasonal draws, which is certainly a good sign,” Ashley Petersen, lead oil analyst at Stratas Advisors in New York, said in a telephone interview. “It’s a good bellwether indicator that the demand is still there and the production isn’t overwhelming supplies.”
Oil has held above $55 a barrel in New York since mid-November as the Organization of Petroleum Exporting Countries and allied suppliers such as Russia curbed output to erode a glut. West Texas Intermediate futures, which as recently as June were down more than 20 percent for the year, now are on track to finish 2017 with a gain of almost 7 percent.
West Texas Intermediate for February delivery traded at $57.68 a barrel at 4:40 p.m. on the New York Mercantile Exchange after ending the regular session at $57.56.
Brent for February settlement advanced 39 cents to settle at $63.80 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $6.12 to February WTI.
“The global oil market is under-supplied,” Pavel Molchanov, an energy research analyst at Raymond James in Houston, said by telephone. “We envision more upside in oil.”
Repairs are progressing on the Ineos Group-operated Forties Pipeline System that connects North Sea oil fields to the U.K. mainland, according to a company statement. Custom equipment has been fabricated and will be delivered parts within days to repair the hairline crack that forced a shutdown last week.
The Forties system is among the planet’s most important pipelines because the crude it delivers is used to set prices for much of the world’s crude.
Traders are weighing “a slightly tighter physical market at the moment,” Brad Hunnewell, senior equity analyst at Rockefeller & Co., said by telephone.
U.S. crude stockpiles at the key pipeline hub in Cushing, Oklahoma, probably fell by 2.2 million barrels last week, according to a forecast compiled by Bloomberg. That would be the sixth weekly drop, the longest run since July, according to data from the U.S. Energy Information Agency.
The API report was also said to show that gasoline stockpiles climbed by 2 million barrels last week, while distillate supplies shrunk by 2.85 million. The draw in distillates would be the largest decline since early November if the EIA confirms it.
Oil-market news:
Saudi Arabia expects oil revenue to jump 12 percent next year in a sign the world’s biggest crude exporter expects prices to keep rising. Saudi Arabia said its air defenses intercepted a ballistic missile fired by Yemen rebels at the royal palace in the capital, Riyadh, an attack that threatens to edge the kingdom and its chief nemesis, Iran, closer to confrontation. Evercore ISI boosted its Brent price forecasts for 2018 and 2019 by $5 a barrel to $65 and $70, respectively. TransCanada Corp. won’t be allowed to amend its application to more specifically address the alternative route approved by Nebraska regulators last month for the company’s proposed Keystone XL pipeline.
With assistance from Francine Lacqua, Ben Sharples and Grant Smith. To contact the reporter on this story: Jessica Summers in New York at jsummers24@bloomberg.net. To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Joe Carroll, Carlos Caminada.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Blockchain Demands Attention in Oil and Gas
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- CNPC Opens Sea-Land Oil Storage and Transport Facility in Bangladesh
- Oman Sees Increasing Ship-to-Ship Transfers of Russian Oil Bound for India
- US Govt Makes Record Investment of $6B for Industrial Decarbonization
- Perenco Still Searching for Missing Person After Platform Incident
- Eni, Fincantieri, RINA Ink Deal on Maritime Decarbonization
- Oil Falls as US Inventories Increase
- Czech Utility CEZ Bucks Weaker Prices, Demand to Log Record Annual Profit
- Ithaca Energy Studies Deal for Eni's UK Upstream Assets
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- UK Grid Operator Receives Aid to Advance Rural Decarbonization
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call