Oil above $48 amid report of drop in US fuel stocks
Oil rose above $48 (Dh176) a barrel yesterday in response to a fall in US fuel inventories and a cut in the US government’s forecast for crude output next year which raised hopes that a supply glut is easing.
US crude inventories fell by 8.1 million barrels, industry group the American Petroleum Institute said on Tuesday, much more than the forecast.
Official inventory data from the Energy Information Administration was expected at 1430 GMT.
Brent crude, the global benchmark, was up 86 cents, at $48.38 a barrel by 0824 GMT. US crude gained 93 cents to $45.97.
“While further upside could be expected in the short term amid the speculation of a cut in US production, gains may be limited by the firm oversupply dynamics of the markets,” FXTM analyst Lukman Otunuga said.
The US crude stocks drop will raise hopes that a long-awaited market rebalancing is under way. A supply glut has stuck around for three years, despite an Opec-led output cut in 2017, keeping oil at less than half its price of mid-2014.
The source also cited late May port closures as pushing some cargoes into June, which may have resulted in higher June exports. The source said July oil output would be lower than June, without providing details.
Total stocks
“While supply is not increasing except from exempt countries such as Libya and Nigeria, demand is picking up and we are starting to see inventory draws in total petroleum stocks in recent weeks. “Saudi Arabia will continue to work closely with other producers to monitor and stabilise the market by making sure that production cuts are continuing,” the source said.
A joint ministerial committee from Opec and non-Opec countries including Saudi Arabia and Russia, the world’s biggest oil producers, will meet on July 24 to discuss compliance with a supply-cut pact and review the rise in output from Nigeria and Libya. Both countries were exempted from the production cuts. The Saudi source said ministers would discuss several ideas at the meeting and that the recent rise in output from Nigeria and Libya “is not big in a way that should disturb the market”.