Oil prices rise on falling USA crude stocks, but global glut weighs

Crude Oil

Crude Oil

"Crude oil prices failed to hold recent gains, with a nervous market starting to doubt recent falls in inventories", ANZ bank said in a note.

Oil prices rose on Wednesday, lifted by declining USA crude inventories, although markets were still restrained by general oversupply.

Crude inventories fell by 8.95 million barrels in the last week, almost three times analysts' expectations for a decrease of 3.1 million barrels.

The TSX shed 22 points on Tuesday, with material and energy stocks as the main decliners.

Brent oil for October LCOV7, +0.45% settled 7 cents, or 0.1%, higher at $50.80 a barrel on ICE Futures Europe-bouncing off an earlier low of $50.02 a barrel.

Oil output from major US shale plays is poised to reach a fresh record next month, further complicating OPEC's efforts to support prices.

September WTI (West Texas Intermediate) crude oil (OIH) (SCO) (DIG) futures contracts rose 0.5% to $47.81 per barrel in electronic trading at 1:50 AM EST on August 16, 2017.

Most analysts are expecting figures of 3.179 million drop in crude stocks in the upcoming announcements while a total of 1.527 million barrels decline in gasoline inventories and shrink the total supplies by 620,000 barrels.

Oilfield services firm Baker Hughes reported Friday that its weekly count of oil rigs operating in the US ticked up by three rigs to a total of 768 last week.

Asian refiners would welcome the so-called heavy, or higher density, crude since production cuts by the Organization of Petroleum Exporting Countries (OPEC) have mainly curtailed this type of oil.

U.S. shale oil production is expected to grow for its ninth consecutive month in September to 6.15 million barrels per day, the U.S. Energy Information Administration said on Monday.

PDVSA has cut sales to USA refining unit Citgo Petroleum since May to increase its supply to Rosneft in order to catch up on overdue Russian deliveries.

"The peak of summer driving season has now passed, and demand for crude should wane also as refinery runs drop, Gasoline demand will ebb as summer road trips are mostly over and children head back to school".

USA gasoline stocks were unchanged, compared with expectations in a Reuters poll for a 1.1 million-barrel drop.

In May this year, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day for an extension. The compliance outside the OPEC is even worse at just 67 percent.

In the next part, we'll analyze how USA gasoline demand impacts oil prices.

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