Out­put de­clines keep oil on win­ning streak

Fu­tures rise as pro­duc­tion in the US takes a dive

The National - News - Business - - Inside Track - Grant Smith

Oil yes­ter­day headed for its long­est win­ning streak in two months af­ter de­clines in US crude pro­duc­tion and petrol in­ven­to­ries al­layed some con­cerns that world mar­kets re­main over­sup­plied.

Fu­tures rose as much as 1.4 per cent in New York to the high­est in two weeks af­ter ad­vanc­ing 5.2 per cent in the pre­vi­ous five ses­sions. US pro­duc­tion tum­bled by 100,000 bar­rels a day last week, the most since early July, the En­ergy In­for­ma­tion Ad­min­is­tra­tion said on Wed­nes­day.

The de­cline was likely driven by field main­te­nance in Alaska and the im­pact of trop­i­cal storm Cindy. Crude stock­piles un­ex­pect­edly ex­panded while petrol in­ven­to­ries fell for a sec­ond week. Oil in New York and Lon­don tum­bled into a bear mar­ket last week on con­cerns that ris­ing global sup­ply will counter out­put cuts from the Opec and its part­ners. US crude in­ven­to­ries re­main more than 100 mil­lion bar­rels above the five year sea­sonal av­er­age.

“Crude oil pro­duc­tion reg­is­tered a de­cent drop” and “this is what the mar­ket fo­cused on,” said Ta­mas Varga, an an­a­lyst at PVM Oil As­so­ci­ates in Lon­don. “Prod­uct fig­ures were prob­a­bly equally sup­port­ive.”

West Texas In­ter­me­di­ate for Au­gust de­liv­ery was at $45.3 a bar­rel on the New York Mer­can­tile Ex­change, up 58 cents, at 1.09pm in Lon­don. Total vol­ume traded was 5 per cent above the 100-day av­er­age. The con­tract gained 50 cents to $44.74 on Wed­nes­day. Prices are down 6.2 per cent this month.

Brent for Au­gust set­tle­ment, which ex­pires to­day, gained 59 cents to $47.90 a bar­rel on the Lon­don-based ICE Fu­tures Europe ex­change. The con­tract added 66 cents, or 1.4 per cent, to $47.31 on Wed­nes­day. The global benchmark traded at a pre­mium of $2.58 to WTI. US crude out­put dropped to 9.25 mil­lion bar­rels a day last week, ac­cord­ing to the EIA. Crude stock­piles rose by 118,000 bar­rels to 509.2 mil­lion, the first in­crease in three weeks.

All 10 an­a­lysts sur­veyed by Bloomberg be­fore the re­port had pre­dicted in­ven­to­ries would de­cline.

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