Oil prices climb after unexpected drop in U.S. crude stocks

HE Khalid Al Falih Felicitated with 'International Oil Diplomacy Person of the Year 2017' Award

They key factor that could prevent another glut from happening is of course demand, and on that count the Energy Information Administration, which on Thursday reported that stockpiles at Cushing shrank for a ninth straight week to 30 million barrels, also disclosed that USA crude exports surpassed 2 million barrels per day last week for only the second time on record.

Oil surged to the highest in two weeks as American supplies unexpectedly shrank and exports surged, dispelling fears that a new shale boom will leave the country awash in crude.

While the reduction in USA inventories supported crude prices, America's low imports and surging exports were weighing crude down, traders said.

Oil slipped toward $66 a barrel on Friday as rising US oil output and exports countered OPEC-led attempts to erode stockpiles with output curbs and a dip in Libyan production.

"The market's been concerned about USA production ramping, so as long as you still have these healthy inventory reports, it helps ease some of the fears".

Net imports to the U.S. have fallen to a record low according to the Energy Information Administration.

Other analysts pointed to the shape of the oil price curve as the reason for the stock draw.

Crude prices gained more than 50% in the second half of 2017, partly boosted by OPEC's agreement.

Reuters reports in its article Oil eases on expected USA crude inventory build, stronger dollar that Brent crude futures LCOc1 were down 28 cents at $65.14 a barrel by 1007 GMT, while West Texas Intermediate (WTI) futures CLc1 dropped 37 cents to $61.31 a barrel.

Gasoline stockpiles rose by 300,000 barrels, and stocks of distillates declined by 2.4 million barrels.

With the market in backwardation, where crude prices are now higher than the future prices, traders say it's no longer profitable to store crude.

S. crude jumped to just above 2 million bpd, close to a record 2.1 million hit in October.

"Given the market's whipsaw reaction we could add another key takeaway, that recent heightened market volatility could be here to stay", LCG markets strategist Jasper Lawler said. That contrasted with a 2.9 million increase estimated in a Bloomberg survey ahead of the release.

Am I seeing the right investments coming to the market?

He said the OPEC and non-OPEC members were committed to bringing stability and to balancing the market.



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