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Oil rises as US weekly production eases
June 29, 2017
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NEW YORK: Oil futures climbed on Wednesday to their highest in more than a week despite a surprise build in crude inventories, as buyers were encouraged by a small weekly decrease in US production.

The US Energy Information Administration (EIA) said crude stocks rose by 118,000 barrels during the week ended June 23, while weekly production declined by 100,000 barrels per day (bpd) to 9.3 bpd.

Wall Street was higher in late morning trading on Wednesday as financial and consumer stocks led a broad rally among the major sectors.

Bank stock reflected a rise in treasury yields, following a Reuters report that the market had overinterpreted chief Mario Draghi’s comments that the ECB was ready to start withdrawing the emergency stimulus for the economy.

The sources clarified that Draghi intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening.

The financial index’s 1.16 per cent rise led the gainers, with Bank of America, JPMorgan and Citigroup all up more than 1 per cent.

The consumer discretionary index rose 0.9 per cent, helped by a gain in Walt Disney, Comcast and Amazon.

At 10:57 a.m. ET (1457 GMT), the Dow Jones Industrial Average was up 126.57 points, or 0.59 per cent, at 21,437.23, the S&P 500 was up 18.26 points, or 0.75 per cent, at 2,437.64.

“Most interesting thing is crude oil production was down... which is a significant decline given the increases in previous weeks,” Andrew Lipow, president of Lipow Oil Associates in Houston, said. Lipow said production was most likely pressured by a storm in the Gulf of Mexico last week.

Also, the production decline came after US output reached almost 9.4 million bpd during the prior week, the most since August 2015.

Brent futures were up 55 cents, or 1.2 per cent at $47.20 a barrel by 11:28 a.m. EDT (1528 GMT). US West Texas Intermediate crude was up 44 cents, or 1 per cent, at $44.68 per barrel.

That was the highest since June 19 for both contracts, which are on track for a fifth straight day of gains for the first time since mid May. Both contracts were up about 5 per cent since June 21 when Brent fell to a seven-month low of $44.35 and US fell to a 10-month low of $42.05.

Oil rose after the EIA’s weekly inventory report, even though data showed a build instead of the 2.6 million barrel draw that analysts had forecast in a Reuters poll.

Some analysts believe the sell-off was overdone.

Ian Taylor, head of the world’s largest independent oil trader Vitol, said Brent will stay in a range of $40-$55 a barrel for the next few quarters as higher US production slows a rebalancing of the market.

Reuters

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