Published: Wed, April 18, 2018
Money | By Armando Alvarado

Oil Hits Near 4-Year Peak as Crude Supplies Fall

Oil Hits Near 4-Year Peak as Crude Supplies Fall

U.S. WTI crude oil futures +1.8% to $67.72/bbl after hitting a fresh high going back to December 2014, and Brent crude +1.6% to $72.70/bbl, following yesterday's American Petroleum Institute report of a surprise 1M-barrel decline in U.S. crude inventories.

"OPEC production is now lower than expected as a result of large declines in Venezuelan output caused by a deterioration in the economic situation there", he said.

For next year, however, ING expects lower prices due to rising US crude output, which has jumped by a quarter since mid-2016 to over 10.5 million bpd.

The West Texas Intermediate (WTI) for May delivery increased 0.30 US dollar to settle at 66.52 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery added 0.16 dollar to close at 71.58 dollars a barrel on the London ICE Futures Exchange. Distillate inventories are forecast to fall in the EIA report.

"Oil inventories have built by just three million barrels so far this year, compared to over 50 million barrels a year ago", he said.

Stockpiles of gasoline fell by 2.5 million barrels, outpacing the 450,000-barrel increase expected in a Bloomberg survey.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.1 million barrels, EIA said. The S&P Global Platts survey forecast supply declines of 1.9 million barrels for gasoline and 1.6 million for distillates.

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Gasoline demand was almost 9.9 million barrels a day.

Oil prices rose to their highest levels since late 2014 after government data indicated USA crude stockpiles fell last week and as the market continued to worry about supply disruptions.

The weekly measurement on demand may be "overstated", but "suggests that some driving season weeks in 2018 will see more than 10 million [barrels a day] in gasoline demand, unless there is a disincentive tied to a much more radical increase in gas prices", said Kloza.

May natural gas ended little changed at $2.739 per million British thermal units. "They need higher prices".

Elsewhere, the reported arrest of two Chevron Corp.

"Despite an oil price of over $70 per barrel and the fact that the oversupply has been eliminated, a phase-out of the production cuts will not be on the agenda", Commerzbank oil analyst Carsten Fritsch said.

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