While global markets are worried about European Union tapering and the possibility off a hard Brexit, oil seems oblivious to those threats as the U.S. oil glut is receding at a historic pace. The American Petroleum Institute (API) reported that U.S. crude oil inventories fell by 7.6 million barrels.If confirmed by the Energy Information Administration (EIA), that would be the 5th weekly drawdown in inventory in a row.
Some crude oil traders are having a hard time getting their heads around the impact of the new OPEC accord. While many still express skepticism that this agreement will reduce supply, they are missing the point. For the first time in almost 8 years the cartel has agreed to limit production.
Crude oil prices soared in the aftermath of the first OPEC deal in 8 years and now we have to look at the demand side. While the historic OPEC and soon to be Non-OPEC accord will put a floor under prices, demand fears are causing a bit of ahead-of- weekend profit taking.
They said it wouldn’t get done but OPEC went ahead and did it anyway. OPEC, in Algiers, agreed to reduce oil output to a range of 32.5 to 33 million barrels a day that could eventually lead to a larger cut. But it is not just the amount of oil, the key is that the cartel agreed to anything.
The energy complex is trading higher after the EIA released its latest weekly oil inventory report. The data showed Total Crude & Product stocks decreased by 10,000/bbls to 1390.907/mmbls for week ending Sept. 23. Looking at the year on year for Total Crude & Product stocks we see we are now 89.6/mmbls above last year’s level for this time of the year and above the five year average by 242.6/mmbls.
Crude oil prices rose on Wednesday, after sharp losses in the previous session, as the focus shifts to a potential output-curbing deal from OPEC later this year and a surprise drawdown in U.S. crude stocks.
Round one of the U.S. presidential debate is over and as expected big punches were exchanged from both sides, but clearly no knockout blows were landed. Although polls were showing different outcomes of who won the debate, financial markets obviously declared Clinton as the winner.
Talks between Saudi Arabia and Iran had not gone well as the Iranians seemed intent on raising output to 5 million barrels a day and the Saudis wanted to have independent verification of oil output to make sure there was no cheating.
Saudi Arabia has offered to reduce oil production if rival Iran agrees to cap its own output this year, in a major compromise ahead of talks in Algeria next week, four sources familiar with the discussions told Reuters.
The energy complex are trading higher after the EIA released its latest weekly oil inventory report. The data showed Total Crude & Product stocks decreased by 6.034/mmbls to 1390.917/mmbls for week ending Sept. 16. Looking at the year-on-year for Total Crude & Product stocks we see we are now 93.2/mmbls above last year’s level for this time of the year and above the five-year average by 242.9/mmbls.