USA crude oil stocks drop

Paterniano Del Favero
Aprile 21, 2017

Latest data from the Energy Information Administration showed USA output rose to 9.25 million barrels a day last week, the highest level since August 2015. The fall in gasoline inventories could support gasoline and crude oil prices.

"We are still in a very well-supplied crude market in the U.S. The gasoline build was a bit of a surprise but makes sense given that this is the time of year refinery runs increase", Wellington, Florida-based Energy Analytics Group LLC director, Thomas Finlon, told Bloomberg by telephone.

Global fuel stocks are well above the five-year average, and Saudi Energy Minister Khalid al-Falih was quoted on Thursday as saying inventories remained elevated in part because traders were selling supplies out of tanker storage.

U.S. West Texas Intermediate (WTI) crude futures were up 12 cents, or 0.2 percent, to $50.56 a barrel.

Brent crude futures were at $53.31 per barrel at 0108 GMT, up 38 cents, or 0.72 percent, from their last close.

The continued growth in USA production and the rise in stockpiles forced the market to respond bearishly based on the increased inventory outlook.

Both benchmarks had traded more than 50 cents higher earlier in the day, but gains eased at the start of USA trading hours.

"The market sentiment appears to be that the increase in USA shale production outweighs the OPEC action and the market is keeping the loss we had yesterday", he said. Gasoline stocks posted a counter-seasonal build of 1.5 million barrels, despite heavier refining activity.The surprise gasoline build, along with an increase in USA production and imports from OPEC nations, pressured prices.

OPEC members Saudi Arabia and Kuwait signaled that the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, would likely extend their oil output cut beyond June.

"They drop production, we add production, and so at end of the day it's ugly", said Robert Yawger, energy futures strategist at Mizuho Americas.U.S. production rose to 9.252 million barrels a day in the latest week, highest since August 2015.

Traders said that the rising US crude production posed a concern that the oil supply overhang would continue, while the jump in gasoline stocks implied a stutter in demand.

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