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Oil stable after drop in US gasoline stocks, but market remains bloated

Published 09/02/2017, 12:41 pm
Updated 09/02/2017, 12:50 pm
© Reuters.  Oil stable after drop in US gasoline stocks, but market remains bloated
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By Henning Gloystein

SINGAPORE, Feb 9 (Reuters) - Oil prices stabilised on Thursday, boosted by an unexpected draw in U.S. gasoline inventories, although bloated crude supplies meant that fuel markets remained under pressure.

Brent crude futures LCOc1 , the international benchmark for oil prices, were trading at $55.27 per barrel at 0137 GMT, up 15 cents from their last close.

U.S. West Texas Intermediate (WTI) crude CLc1 was up 14 cents at $52.48 a barrel.

The U.S. Energy Information Administration (EIA) said on Wednesday that gasoline stocks USOILG=ECI fell by 869,000 barrels last week to 256.2 million barrels, versus analyst expectations for a 1.1 million-barrel gain. EIA/S

Traders said that this surprise increase in U.S. gasoline inventories had helped push up crude, though most added that fuel markets were still bloated and that this would likely prevent further big price rises.

"We remain highly sceptical of the overnight price action," said Jeffrey Halley, senior market analyst at futures brokerage OANDA, referring to rising crude.

U.S. commercial crude inventories soared by 18.8 million barrels to 508.6 million barrels, according to the EIA. bank Goldman Sachs (NYSE:GS) said that high fuel inventories as well as rising U.S. crude production mean that oil markets will remain over-supplied for some time.

"The 4Q16 global oil market surplus led to further rises in global inventories in January, and as a result the draws that we expect will start from a high base," the bank said.

"U.S. production has also rebounded faster than our rig modelling suggested...and we view the faster shale rebound as creating downside risk to our 2018 WTI price forecast of $55 per barrel, but not to our expectation that the global oil market will shift into deficit in 1H17," it added. high inventories undermine efforts by the Organization of the Petroleum Exporting Countries and other producers including Russia to cut output by almost 1.8 million bpd during the first half of this year in order to prop up prices and rebalance the market.

As a result, both Brent and WTI are down around 5 percent since early January, when the OPEC-led cuts started to be implemented.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC: OPEC vs U.S. oil production

http://tmsnrt.rs/2kPMpyh GRAPHIC: Global oil supply vs demand

http://tmsnrt.rs/2jUJLWm

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