Oil edged higher on Wednesday as OPEC said it was committed to eroding a global surplus of crude, but increasing shale production in the United States and still-high global stocks threatened to pull prices lower.
While the energy markets are focused on crude and crude alone, the total U.S. petroleum stocks have been tightening more significantly. The Energy Information Administration reported that the total commercial petroleum stocks fell 4.7 million barrels compared to a 6.9 million barrel increase a year ago.
Rising geo-political tensions and a tightening global supply outlook is supporting crude oil. The strength comes even as the dollar is higher, being supported by risk aversion. Syria and North Korea concerns and terror attacks on innocent Coptic Christians in Egypt is raising concerns of conflict that could impact oil supply.
The crude oil glut does not help gasoline supply. Gasoline prices hit the highest price since last January as supply continues to fall and demand continues to rise. While traders are fixated on the so-called glut of oil supply and the resumption of Libya’s largest oil field, the global surplus is tightening.