Published: Thu, September 21, 2017
Finance | By Kristine Clayton

USA crude posts 5.1% weekly gain to settle at $49.89

USA crude posts 5.1% weekly gain to settle at $49.89

Crude inventories rose for a third straight week, building by 4.6 million barrels, about a million more barrels than forecast.

This comes despite OPEC's decision in January to cut oil production by 1.8 million bpd at least until March 2018, a cut made in conjunction with along with major oil producer Russian Federation.

Futures jumped 1.9 per cent in NY.

Iraq´s oil minister Jabbar al-Luaibi said on Teusday that his country´s crude oil production was now at 4.32 million barrels per day (bpd). Some U.S. refiners are delaying maintenance to take advantage of strong margins. As a result, there was less demand for oil from refineries and more demand for gasoline sitting in storage while less gasoline was being produced That's partly why gasoline prices spiked by almost 20 percent.

While oil has rebounded the past two weeks, crude in the USA has struggled to hold above $50 a barrel as prices beyond that level make some shale profitable and boost supply.

"Some producers think the pact should be extended for three or four months, others want it to run until the end of 2018, while some, including Ecuador and Iraq, think there should be another round of supply cuts", Luaibi said.

"API yesterday sprung a bit of surprise when only showing a small build in crude stocks and a bigger-than-expected drop in fuel stocks", said Ole Hansen, head of commodity strategy at Saxo Bank A/S. "WTI is seeing resistance at $50 because of increased hedging activity from USA producers above that level, which is viewed as a comfortable break-even price for many producers".

November WTI Crude Oil settled at settled at $50.28, down $0.07 or -0.14% and December Brent Crude oil closed at $55.15, down $0.10 or -0.18%. Prices lost 34 cents to $55.14 on Tuesday.

US gasoline held in storage shrank by 2.13 million barrels last week to a level not seen since November 2015, the Energy Information Administration said in a weekly report on September 20.

Gasoline stocks fell 2.1 million barrels, in line with analysts' expectations while distillate stocks inventories fell 5.7 million barrels, the biggest weekly draw since November 2011. The global benchmark crude traded at a premium of $5.32 to November WTI.

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