Oil prices up more than 13 per cent since early December
Oil prices rose on Wednesday after data from the US Energy Information Administration showed crude stocks in the United States fell more than analysts had anticipated.
By 1:28 p.m. EST, Benchmark Brent was at $68.86, up 4 cents after reaching a high earlier in the session of $69.37, the highest since May 2015. US WTI rose 29 cents to $63.25/barrel, falling from its session high of $63.67, the highest since Dec. 9, 2014.
The Canadian Crude Index rose to $40.59.
The EIA reported that crude inventories fell by 4.9 million barrels last week, higher than the 3.9 million barrel drop anticipated by analysts. Gasoline and fuel stocks, however, rose more than expected.
According to Reuters, the market was also buoyed slightly by a sharp drop in US production last week which analysts say could have been caused by extreme cold temperatures across the US in early January.
“The lower draw in crude oil stocks, combined with the strong builds in product stocks is bearish news for prices. But market participants could also use the sharp drop in production as an excuse to buy,” Carsten Fritsch, oil analyst at Commerzbank AG told Reuters.
As well, a global market rally, including stocks, has also been credited with boosting investment in crude oil futures. In recent weeks, US crude futures have been at levels not seen since late 2014 and Brent is closing in on the $70/barrel mark.
Since early December, oil prices have jumped over 13 per cent and Reuters reports analysts are concerned there are indications of overheating due to steadily increasing US production.
On Tuesday, the EIA bumped up expectations for US crude production in the coming months. Now, it forecasts output to rise to over 11 million barrels per day (b/d) by 2019.
Next month, US crude production is expected to hit 10 million b/d. Only Saudi Arabia and Russia produce more oil.
Photo courtesy Pioneer Natural Resources.