Oil prices rise on expected decline in US crude stocks
LONDON: Oil prices rose yesterday on forecasts of a steep draw in US crude stocks that could indicate global oversupply is starting to shrink. Benchmark Brent crude oil futures were trading up 56 cents, or 1 percent, at $55.48 a barrel at 1329 GMT. US West Texas Intermediate (WTI) crude futures were up 29 cents at $52.41 a barrel, not far off a one-week high of $52.52.
Analysts polled by Reuters expected weekly US crude oil inventories to show a draw of 2.4 million barrels in the week to Dec 16. Stocks fell more than expected in data published last week, lifting expectations for another large drop in this week’s data. A deal to cut global supply among OPEC and non-OPEC producers struck this month has boosted oil prices to 17-month highs. The gains have set up 2016 to be the first year since 2012 in which Brent has risen. Russian Energy Minister Alexander Novak told Russian newspaper Vedomosti that Russia may extend a production cut beyond the first half of 2017 if needed.
“We are in a wait-and-see mood after OPEC newsflow caused much volatility,” said Frank Klumpp, oil analyst at Stuttgartbased Landesbank Baden-Wuerttemberg. “The new balance seems to be between $53 and $57 a barrel on Brent for the next weeks.” Asia is seen posting its biggest net additions to refining capacity in three years in 2017, further boosting demand for crude in the world’s largest and fastest-growing oil-consuming region.
The increase amounts to roughly an additional 1.5 percent of refining capacity on top of Asia’s total installed capacity of nearly 29 million barrels per day. Still, traders see no outright supply shortage for Asian refineries, as the Organization of the Petroleum Exporting Countries is shielding most of its Asian customers from the planned cuts. — Reuters