Oil prices surged even before the American Petroleum Report (API) reported another massive crude oil crude withdrawal. The 10.23-million-barrel draw, if confirmed by the Energy Information Administration, it means that U.S. oil supply is down almost 55 million barrels since the end of March, even as the Strategic Petroleum Resave added over 13 million of barrels of oil into the marketplace. The API brings the total inventory for crude oil in 2017 to a net draw of 7.534 million barrels, the first net draw for 2017 since January according to Oilprice. So we see that OPEC and non-OPEC cuts do matter. As I told Marketwatch, the API reported crude supply draw erases the myth that shale can offset OPEC and non-OPEC cuts barrel for barrel.
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If you look at data from the American Petroleum Institute (API) you will see that it is obvious that OPEC/non-OPEC production cuts are starting to have an impact on U.S. oil inventory. The API not only reported a whopping 8.67-million-barrel drawdown in oil inventory last week, they also reported that during the last five weeks there has been a drop of over 19.277 million barrels.
OPEC cut oil output in March by more than pledged under a supply reduction deal and said oil inventories had fallen in February, suggesting that its effort to clear a supply glut that has weighed on world oil prices is succeeding.
Oil hit a one-month high near $55 a barrel on Wednesday as a fall in U.S. crude inventories raised hopes OPEC-led supply cuts were clearing a glut, while an outage at the largest UK North Sea oilfield lent support.
A new dawn is breaking in the old OPEC cartel and it is a reminder that this is not the same cartel of just a few years ago. Instead of infighting and name calling, there is cooperation and order and that is why OPEC and non-OPEC will secure an extension of the OPEC production cuts. The so-called compliance committee met in Kuwait at a “technical” meeting to assess output cuts.
Oil fell around 1% on Monday as investors continued to unwind bets on higher prices after record cuts last week because of concerns that growing U.S. oil output could hamper an OPEC-led production cut deal.