Oil prices rose slightly on Wednesday after the US Energy Information Administration reported US crude stocks rose by 1.8 million barrels, 1 million barrels less than anticipated.
Oil prices rebound from earlier losses
Oil prices rose slightly on Wednesday despite data from the United States Energy Information Administration showing an increase in US crude stocks.
By 1:07 p.m., EST, benchmark Brent was up 44 cents to $63.16/barrel and US WTI rose 31 cents to $59.50/barrel. The Canadian Crude Index dipped 4 cents to $33.52.
The EIA reported US crude inventories rose by 1.8 million barrels, less than the 2.8 million barrels predicted by analysts prior to the data release. Crude stocks at the Cushing, Oklahoma storage hub fell last week and have been reduced by half since early November.
US refining rates fell last week due to seasonal maintenance, but gasoline stockpiles rose by 3.6 million barrels which is more than analysts had expected.
“Refiners continue to process significantly more crude oil than they have in the past, resulting in higher production of gasoline which is leading to higher product inventories,” Andrew Lipow, president of Lipow Oil Associates told Reuters.
Comments from Saudi Arabia’s energy minister, Khalid al-Falih, also helped underpin oil prices. Falih said major oil producers would rather see tighter markets than end the OPEC supply cut agreement too early.
OPEC and its non-cartel partners in the OPEC supply cut agreement have reduced the global crude glut by cutting their output by a total of 1.8 million barrels per day (b/d).
Rising US production has cut into OPEC’s efforts. Last week, US output rose to 10.27 million b/d, according to data from the US Energy Information Administration. Reuters reports that if confirmed by monthly data, this could be an record high for US crude production.
The International Energy Agency raised its forecast for 2018 demand growth by 100,000 b/d to 1.4 million b/d, but warned the rapid increase in global supply, particularly by US producers, could outpace growth in consumption.
“The rising profile of the country’s oil production remains the predominant bearish factor for oil prices, and the trend is being closely watched by countries participating in the OPEC-led output cut agreement,” Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics told Reuters.
Physical markets reflect this concern as prices for crude from the North Sea, Russia, the US and Middle East have fallen to multi-month lows.