U.S. Demand Boosts Oil Prices
14 June 2018 - 2:30AM
Dow Jones News
By Christopher Alessi and Benjamin Parkin
Oil prices bounced on Wednesday as strong U.S. demand ate into
crude and fuel inventories.
West Texas Intermediate futures rose 0.3% to $66.58 a barrel at
the New York Mercantile Exchange, on track for the highest close
since late May. Brent crude, the global oil benchmark, rose 0.6% to
$76.34 a barrel. Prices had traded lower overnight.
The Energy Information Administration said on Wednesday morning
that crude oil inventories fell by 4.1 million barrels to 432.4
million barrels, a larger reduction than expected. Analysts and
traders surveyed by The Wall Street Journal had forecast a drop of
1.6 million. Gasoline and distillate stocks also fell, surprising
traders looking for increases.
"Everywhere you look, demand is strong. Gasoline demand is
strong, refinery demand is strong," said Phil Flynn, a senior
analyst at the Price Futures Group. "That's supporting prices."
The crude oil market fell from three-year highs made in May as
traders bet global supplies would increase. The Organization of the
Petroleum Exporting Countries and other major producers like Russia
are set to convene next week. Saudi Arabia -- the de facto head of
the cartel -- and Russia have recently indicated a willingness to
increase production in response to steadily rising prices and
geopolitical risks to supply in Venezuela and Iran.
Saudi Arabia's oil minister is flying to Russia this week to
discuss ways to manage the output boost they say they want to
propose at the OPEC summit, officials at the group said.
But other data released Wednesday forecast solid demand. The
International Energy Agency said it expected the world's appetite
for oil to remain robust throughout 2019. In its monthly report,
the agency predicted global oil demand would grow by 1.4 million
barrels a day in 2019, on par with this year.
However, the IEA also said it expects non-OPEC oil production to
continue to surge, largely driven by the U.S. Non-OPEC supply
growth should slow only slightly in 2019, to 1.7 million barrels a
day, compared with 2 million barrels a day this year.
Oil traders largely appeared to shrug off a tweet from President
Donald Trump saying that "Oil prices are too high, OPEC is at it
again. Not good!". In April, a similar tweet from Mr. Trump sent
the price of oil lower momentarily.
The market's main focus is on the OPEC meeting and the
possibility that the cartel and its allies will ramp up production
after more than a year of holding back output, said Ole Hansen,
head of commodity strategy at Saxo Bank. The deal to reduce
production is currently set to expire at the end of this year.
"There is no way around an increase in production by Russia and
Saudi Arabia," said Bjarne Schieldrop, chief commodities analyst at
SEB Markets. "It does not make sense to risk an overly tight
market...just when global economic growth is cooling down."
Among refined products, gasoline futures rose 1.4% to $2.1187 a
gallon while diesel contracts gained 0.5% to $2.1732 a gallon.
--Summer Said and Benoit Faucon contributed to this article.
Write to Christopher Alessi at christopher.alessi@wsj.com and
Benjamin Parkin at Benjamin.Parkin@wsj.com
(END) Dow Jones Newswires
June 13, 2018 12:15 ET (16:15 GMT)
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