Oil in Upward Trajectory As US Supply Data Confirm IEA, OPEC Reports Trend

by Ike Obudulu Posted on September 14th, 2017

New York, USA. Sept 13th. US weekly supply data which revealed a less than expected rise in crude supplies, a hefty drop in gasoline stockpiles and a jump in domestic output as production in the Gulf of Mexico recovered in the wake of disruptions from Hurricane Harvey, confirmed trends from the IEA report and OPEC monthly report earlier released, causing crude oil to maintain it’s upward trajectory, tallying a third straight gain Wednesday, with U.S. prices settling at a five-week high and Brent at its highest since April.

October West Texas Intermediate crude for October delivery CLV7, -0.18% added $1.07, or 2.2%, to settle at $49.30 a barrel on the New York Mercantile Exchange, for the highest finish since Aug. 9. November Brent LCOX7, -0.31% the global benchmark, climbed 89 cents, or 1.6%, to end at $55.16 a barrel, which was the highest finish since mid-April. Brent prices rose on signs of stronger demand and tightening OECD inventories as signaled by the monthly IEA report

Early Wednesday, the U.S. Energy Information Administration said domestic crude supplies climbed by 5.9 million barrels for the week ended Sept. 8. That’s below the forecast for a rise of 10.1 million barrels by analysts surveyed by S&P Global Platts. The American Petroleum Institute had reported late Tuesday an increase of 6.2 million barrels.

But the EIA also reported that total domestic U.S. crude output jumped by 572,000 barrels a day to 9.353 million barrels.

The numbers showed that Hurricane Harvey’s disruptive influence continues. Refinery runs dropped by nearly 400,000 [barrels a day] to a 4½-year low, meaning lower crude demand translated into higher crude flows into storage tanks. On the flip side, a lack of refining activity means we may have seen some hefty draws to the products.

Gasoline stockpiles were down 8.4 million barrels for the week, the EIA said. That was larger than the S&P Global Platts survey expectations for a 4 million-barrel fall.

The government also said distillates, which include heating oil, declined by 3.2 million barrels, well above the forecast for a 300,000-barrel draw.

On Nymex, October gasoline RBV7, -0.51%  fell about a penny to $1.647 a gallon, while October heating oil HOV7, -0.32%  added 2.8 cents, or 1.6%, to $1.769 a gallon. October natural gas NGV17, +0.13%  climbed 5.7 cents, or 1.9%, to $3.058 per million British thermal units.

Photo: BP offshore oil platform

Meanwhile, the Paris-based IEA said earlier in it’s monthly report that the oil market is starting to tighten due to robust demand and a drop in output from both the Organization of the Petroleum Exporting Countries and other producers.

The IEA report confirmed the same trend highlighted in OPEC’s monthly report out Tuesday.

Saudi Arabia and Kuwait have said OPEC could add more non-member countries to the output accord, but that an agreement may not be reached at the group’s November meeting. Instead, the cartel could call an extraordinary meeting for mid-March to discuss a possible extension of the deal.

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