Published: Thu, August 24, 2017
Finance | By Kristine Clayton

Rising Gasoline Inventories Prove Bearish For Oil (USO)

Rising Gasoline Inventories Prove Bearish For Oil (USO)

Oil prices steadied yesterday, supported by signs that global supply may be tightening gradually and restrained by rising United States shale production. Over the past four weeks, crude oil imports averaged over 8.2 million barrels per day, 3.1% below the same four-week period previous year.

"Week after week we are seeing a much bigger-than-expected fall in inventories", he added.

Brent crude futures, the global benchmark for oil prices, are at $51.75 per barrel, down 0.2 percent, from their last close, U.S. West Texas Intermediate (WTI) crude futures are at $47.72 a barrel, down 0.2 percent, Reuters reported.

A day after API's estimate of oil and gasoline inventories pressured prices, the EIA gave the market cause for optimism by reporting not only a draw of 3.3 million barrels in crude oil inventories for the week to August 18, but also a draw in gasoline inventories, contrary to what the API had reported. Its production is key to Libya's oil output, which surged above 1 million bbl/d in late June, about four times its level last summer.

Oil prices edged lower on Wednesday, amid speculation weekly supply data due later in the session will show a gain in USA gasoline inventories despite the peak summer driving season. But oil production elsewhere has been rising, blunting the impact of output cuts by OPEC and its allies.

Crude inventories declined to 463.2 million barrels and were down 6.0% on the year. Years ago we talked about the upside of the USA shale market long before most people understood how dynamic it could be.

Shale dump. BHP Billiton Ltd, after pressure from activist investors, are selling its onshore USA oil-and-gas operations as they have been losing big money in the US shale play.

"Opec-14 supply is expected to average 32.8 million bpd in August representing a decline of 419,000 bpd as compared to the 2017 high observed in July", Daniel Gerber, CEO of PetroLogistics, said.

This oil field produces about 280,000 barrels of crude oil per day. The production has increased by more than a million barrels per day since bottoming around last July.

"Another decline in US crude stocks may push prices somewhat higher again, but the upside may be limited - especially if USA crude production ticks higher again", said Hans van Cleef, energy economist at ABN AMRO.

The oil minister of Kuwait, which is participating in OPEC-led production cuts, said USA crude stocks were falling more than expected because output cuts were taking effect.

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