Crude prices rise on signs of drop in global inventories

Reuters

Reuters

The U.S. West Texas Intermediate crude October contract was at $50.51 a barrel by 07:15 a.m. ET (11:15 GMT), up 54 cents or about 1.08%, just off a four-month peak of $50.81 reached on Tuesday.

Oil has risen nearly 6% since Harvey slammed into the Texas coast on August 25, swamping the heart of the US refining industry and disrupting everything from tanker arrivals to gasoline production.

Despite major Middle Eastern oil producers insisting that they are reducing supplies in a bid to support oil prices, an excess supply is still expected to put a dampener on the market.

USA gasoline inventories shrank last week to a level not seen since November 2015 and distillate stockpiles slid by the most since 2011, the Energy Information Administration said.

Gasoline inventories on the other hand declined by 2.1m b/d and those of distillates by another 5.7m b/d.

Russian helicopter fires on spectators at drills
Russian military helicopters fire during a military exercise at a training ground at the Luzhsky Range, near St. The left helicopter then fires a rocket which hits a cargo vehicle directly in front of the person recording.

This comes despite OPEC's decision in January to cut oil production by 1.8 million bpd at least until March 2018, a cut made in conjunction with along with major oil producer Russian Federation. The data suggesting refiners will need to step up crude processing followed robust demand growth forecasts last week from the International Energy Agency and OPEC.

Oil was up Wednesday ahead of USA production and stockpile data, after Iraq hinted at a possible extension of the current OPEC and non-OPEC production deal. "Any increase in the production from the spring of 2018 would...generate renewed oversupply in the oil market and put prices under pressure", the analysts wrote in a note Wednesday.

The Organization of Petroleum Exporting Countries and other producers are mulling a range of options, including an extension of cuts, but it is premature to decide on what to do beyond March, when the agreement expires, Iraqi Oil Minister Jabar al-Luaibi told an energy conference on Tuesday.

OPEC and non-OPEC producers including Russian Federation have agreed to reduce output by about 1.8 million barrels per day (bpd) until March to reduce global oil inventories and support prices.

Global crude oil prices slipped slightly Monday but stayed close to multimonth highs as traders braced for a potential stockpile build, expected later this week.

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