Inventories Spread: Oil Prices Could See More Upside

Oil Prices Spike In Spite Of Bearish EIA Forecast, Brent Now $50pb

Still, the decline fell short of the 10.2 million barrel draw that the American Petroleum Institute reported Tuesday, and oil's gains were slippery: US crude futures rose as high as $48.87 before pulling back.

That brought US inventories down to 483.4 million barrels, still well above the five-year average but down almost 10 percent from their peak in late March.

Distillate stockpiles, which include diesel and heating oil, fell by 1.9 million barrels, versus expectations for a 453,000-barrel drop, the EIA said.

US West Texas Intermediate futures were down 6 cents, or 0.1%, at $48.69 a barrel. A finish around this level would be the highest since late May.

Total U.S. crude oil inventories stood at 483.4 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.

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Saudi Arabia pointed fingers at OPEC's less compliant members over the weekend, which included the UAE, who had agreed to shave 139,000 bpd of production to stay under 2.874 million bpd-down from its reference level of 3.013 million bpd.

Furthermore, Indonesia's Energy Minister has that the country will join OPEC if the oil cartel does not force it to curb its production.

Since a year ago, oil prices witnessed sharp fall due to ongoing global glut has primarily been driven by a rise in United States production. The EIA reported the inventory data on July 19, 2017. While U.S. crude stockpiles continue to decline during a period of strong seasonal demand, they remain about 100 million barrels above the five-year average.

Gasoline stocks fell by 1 million bbl, compared with analyst expectations for a 614,000-bbl drop.

Used primarily as a blending component in the production of motor gasoline, ethanol's demand increased as USA motor gasoline consumption grew in the past four years from 8.7 million b/d in 2012 to 9.3 million b/d in 2016. If that release shows a similar decline to API, prices will rise even more, said Michael McCarthy, an analyst at CMC Markets.

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