Published: Sat, December 30, 2017
Markets | By Josh Butler

US crude stocks drop 4.6 mln bbls

US crude stocks drop 4.6 mln bbls

In late 2014, when was vacillating between roughly $60 and $80 a barrel, Tom Kloza of the Oil Price Information Service for a plunge in crude prices over the next year. Brent Crude Oil price at London's IСE Stock Exchange up by 0.02% to $66.53 per barrel.

The market has been buoyed by dwindling crude inventories, as investors have been reassured by steadily shrinking supply. While Canada remains the largest destination for US crude oil exports, Canada's share of total USA crude oil exports has declined, dropping from 92% in 2015 (427,000 b/d) to 58% in 2016 (301,000 b/d).

The jump came as the number of USA rigs drilling for oil held steady at 747 this week, according to the Baker Hughes rig count, a closely-watched benchmark of industry activity released Friday.

"The inventory trends have been very bullish", said Kyle Cooper, a consultant with ION Energy Group. Flows through Forties are likely to return to normal early in the New Year, the operator Ineos stated.

In November, the Organization of the Petroleum Exporting Countries, along with a group of other major producers outside the cartel including Russian Federation, agreed to extend a deal to cap production through 2018.

Besides the weekly drawdown, the EIA also said that U.S. oil production dipped to 9.754 million barrels per day, down from 9.789 million bpd the previous week.

Since early 2017, the Brent and WTI crude have risen by 17% and 12% respectively, although growth has even reached 50% since the middle of the year.

"There's an idea that the global economy is looking pretty good", McGillian said, pointing to rising demand in other regions.

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Refiners have helped chip away at excess crude supply by turning it into products such as gasoline and diesel. In 2018, investors will watch whether rising prices trigger a new flood of USA output.

Trading was typically thin at year end, with many traders on vacation.

"We're seeing a response to the weather, no question". Most other USA petroleum exports stay in the Western Hemisphere, but some of the top destinations for United States propane exports are Asian countries such as Japan and China.

Production disruptions in Libya and Nigeria and a possible renewal of USA sanctions on Iran are also likely to support prices in 2018, analysts said.

Distillate stockpiles, which include diesel and heating oil, rose by 1.1 million barrels, versus expectations for a 584,000-barrel drop, the EIA data showed.

"We've seen quite a bit of hedging activity in last 30 days", Mr. Kung said.

While the threat of too much shale production next year still looms, producers are ending the year a lot less gung-ho than they started.

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