WTI Crude oil soared sharply yesterday after the US EIA reported that weekly US crude oil inventories dropped by 1.6 million barrels in the week to February 16. That helped pull down net imports to the lowest level on record of below 5 million bpd.
News of a production halt at Libya's 70,000 barrel-a-day El-Feel field helped cap a weekly drop of more than 3 percent, after a report on Thursday showed storage tanks at the Cushing, Oklahoma, hub are at their lowest levels since 2014 as exports of USA crude surge.
Overall total oil products demand is averaging a very healthy 20.6 million barrels per day, up by 4.3% from the same period previous year. "But the expectation looking at our numbers is that we shouldn't exceed 1.8 million b/d, and we've said that it covers pure crude, it does not cover condensates", he said. Prices had rallied in early 2018 and reached US$71.28 on January 25, the highest since December 2014.
The Energy Information Administration calculates that daily output, which was the highest since 1972 last year, could hit a new record of 10.6 million barrels this year, the Wall Street Journal reports.
"The U.S.is pumping out a record amount of oil", said Naeem Aslam, chief market analyst at Think Markets UK Ltd.
The contract rose 3.8 percent from last week's US$64.84 a barrel.
West Texas Intermediate (WTI) crude futures for April delivery rose $1.05 to $62.73 a barrel, a 1.7 percent gain, by 11:49 a.m. EST (1649 GMT).More news: Larry Nance Jr. to wear father's No. 22 for Cavaliers
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Last year, the sale of 8 million barrels of light, sweet crude oil from the SPR fell under a measure passed in December 2016 that allowed for the sale of up to $375.4 million in strategic reserves to finance its upkeep and modernization. US crude fell 10 cents to $62.67.
Despite this, the stronger USA dollar has pushed most oil prices lower during the past week. Analysts said low import figures contributed to the decline.
"We see more downside for oil, as the sentiment cycle deflates and strong shale output growth challenges the market tightening narrative", said Norbert Ruecker, head of macro and commodity research at Julius Baer.
United States production is expected to rise even more this year and top 11 million bpd in late 2018, a headwind for OPEC efforts to drain stockpiles.
Saudi Arabian Oil Minister Khalid al-Falih said on Saturday (24/02) that he hopes the production constraints under a deal between major OPEC and non-OPEC oil producers will ease in 2019.
OPEC wants to reduce oil inventories held by industrialised nations to their five-year average and is getting closer to that goal, although officials are starting to talk about looking at different metrics.