Published: Fri, April 20, 2018
Markets | By Josh Butler

Oil extends rally before OPEC meeting after U.S. stockpiles fall

Oil extends rally before OPEC meeting after U.S. stockpiles fall

Futures extended gains after weekly government data showed US crude stockpiles fell by 1.1 million barrels.

Reuters reports that OPEC officials claim their supply quota plan with Russian Federation has had the intended effect of re-balancing the global oil market.

Although U.S. crude production continues to rise, it's going to take a huge leap in the number of producing oil rigs to stop the momentum that is now driving prices higher. USA benchmark West Texas Intermediate hit a post-2014 high of $69.56 a barrel on Thursday, which should spur additional drilling in the sector.

Futures in NY rose 2.9 percent on Wednesday.

Brent crude oil futures rallied as high as 74.44 dollars a barrel, the strongest since November 27, 2014, the day that OPEC chose to pump as much as it could to defend market share.

The EIA reported US crude stockpiles dropped 1.07 million barrels last week, while supplies at the Cushing, Oklahoma, pipeline hub dropped by 1.12 million.

In the United States, commercial crude stocks fell close to the five-year average of about 420 million barrels.

#TwitterDown: Twitter was down for a number of users across the globe
In the Down Detector website, which tracks services when they go offline, many users from Mumbai to NY were reporting outage. As reported , Twitter stopped working in the United States, parts of Europe including the United Kingdom and Japan.

These three Opec members have drawn increasing attention, overshadowing a recovery in the U.S. shale oil industry, whose surging output has so far failed to derail the rally as it appears to have been largely absorbed by the strong global economy and oil demand growth.

That January 2017 pact has been renewed, and the policy will continue until at least December 2018.

Crude futures were already higher ahead of the release after the American Petroleum Institute reported a 1-million-barrels drop on Tuesday afternoon.

Extending OPEC's current deal with Russian Federation and other top non-OPEC members to cut production by 1.8 million barrels of oil per day would help raise prices. Late previous year, they agreed to extend the pact to the end of 2018. According to analysts, OPEC (Saudi Arabia) and Russian Federation look determined to continue with the cuts at least until their official expiry date at the end of 2018, despite the fact that their official target-bring OECD oil stocks down to their five-year average-could be achieved any moment now. Saudi Arabia ran budget deficits that were unthinkable before 2014, and its breakeven budget price is said to be upwards of $80 oil.

The Schork Report Publisher Stephen Schork on the outlook for oil prices and the Aramco IPO. Rocket attacks by rebels in Yemen on top oil exporter Saudi Arabia have also contributed to oil's geopolitical risk premium.

Meanwhile, production continues to decline in Venezuela, where economic crisis has paralyzed the nation's lifeblood oil industry.

Like this: