Amid signs that U.S. oil production growth is stalling and that OPEC is tightening the market and may not move in response to U.S. President Donald Trump's latest Twitter address to the cartel "to increase the flow of oil", oil prices rose on Monday to their highest levels in almost five months.
The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France March 28, 2019.
Brent crude recorded multi-month highs today, climbing for the fourth day in a row and rising as high as $69.92 per barrel, its highest price since November 2018.
The brent crude rose to $69.11, while USA crude tapped at $61.70, highrst since November 2018.
Distillate inventories decreased by 1.9 million barrels, compared to an expected draw of 506,000 barrels for the week.
"Crude imports rose and crude exports fell, which translates into considerably higher net imports".
On Tuesday, crude oil futures for May ended up $0.99, or 1.6%, at $62.58 a barrel. "All of this contributed to the large stock build".
"Those are the issues that have supported the market here", said Bob Yawger, director of futures at Mizuho in NY.
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Crude oil is also supported by an agreement between the Organization of the Petroleum Exporting Countries and allies such as Russian Federation, a group known as OPEC+, to reduce oil output by about 1.2 million bpd this year.
The deal between OPEC and non-OPEC oil producing countries, first signed in 2017, is supposed to prevent a crisis due to sliding oil prices, which have continued and picked up pace late a year ago.
Meanwhile, WTI is now trading at $62.84 per barrel, having hit a four-month high of $62.89 soon before press time.
As for geopolitical developments affecting crude, analysts weren't shy about predicting what U.S. president Donald Trump will do next, and the team at Eurasia Group speculated in a research note that "The U.S. will probably fail to reduce Iranian exports to zero, despite renewed talk from the White House about letting all oil import waivers expire in early May" - and that this will ironically help fulfill his goal of keeping gasoline prices palatable for motorists.
In its latest Short-Term Energy Outlook (STEO), EIA forecast that USA crude oil output will average 12.3 million barrels per day in 2019 and 13.0 million barrels per day in 2020, with most of the growth coming from the Permian region in the states of Texas and New Mexico.
But the gains were moderated during the session, with USA crude briefly turning negative.
The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday at 10:30a.m. EST.
US commercial crude inventories surged by 7.2 million barrels in the week through March 29, the Energy Information Administration reported on Wednesday.
New of oil supply tumbling comes as three of eight countries granted waivers by the United States to import oil from Iran have cut the imports to zero, a U.S. official said. "That is taking a lot of oil away from the market".