While the overall bullish narrative remains rich (OPEC-led supply curtailment, decline in global inventories and rising demand), the EIA forecast comes with crude markets have perhaps been looking increasingly ripe for a correction. The commercial crude inventory remained in the middle of the average range for this time of year.
USA crude inventories fell by 5.1 million barrels in the week ended January 12 to 411.5 million, according to the API.
The West Texas Intermediate for January delivery decreased 0.02 USA dollar to settle at 63.95 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery lost 0.07 dollar to close at 69.31 dollars a barrel on the London ICE Futures Exchange.
As at yesterday evening, Brent crude oil price settled at N69.87 per barrel while the West Texas Intermediate (WTI) sold at N64.30 per barrel.The Secretary General, Organisation of the Petroleum Exporting Countries (OPEC), Mohammad Sanusi Barkindo, also identified other factors contributing to the recently gathered pace of rebalancing.
OPEC said US shale producers lowered breakeven costs between 2015 and 2017 but now service companies are raising rig and labor costs so breakeven prices are rising.More news: Steelers minority owners will lobby to fire head coach Mike Tomlin
More news: Ford plans more SUVs, fewer cars, aims to pay billions to shareholders
More news: Centurion Test: Shami's triple strikes keep India in the hunt
"The continued draw-downs in crude inventories is indicative that the US market is more balanced today than it has been in several years", Matthew Beck, managing director of an $8 billion oil and natural gas portfolio at John Hancock Financial Services Inc.in Boston, said by telephone. Prices are close to the highest since December 2014.
The drop also outpaced the estimated 5.1-million barrel decrease from the American Petroleum Institute, an industry group. Crude prices are still up 51% since the lows seen in June previous year. However, the API data, which was released a day later than usual because of the Martin Luther King Jr. holiday, showed a rise of 1.8 million barrels in gasoline stockpiles, while inventories of distillates rose by 609,000 barrels, sources said. In fact, the US Energy Information Administration (EIA) reckons that US shale oil output will increase by a good 111,000 barrels per day next month to 10 million bpd and that it will rise to about 11 million bpd by the end of next year.
Gasoline futures climbed 1.4% to $1.8835 a gallon, and diesel futures fell 0.4% to $2.0617 a gallon.
Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report. Over the past 12 months, Exxon stock has traded up about 1.5%. Brent, the global benchmark, edged down 7 cents, or 0.1%, to $69.31.