Oil markets cling to near three-year highs on tighter U.S. market
Oil prices held near three-year highs on Thursday, supported by a surprise drop in U.S. production and lower crude inventories, although analysts increasingly warned of signs that fuel markets have overheated.
U.S. West Texas Intermediate (WTI) crude futures
Brent crude futures
Oil markets have generally been supported by a production cut led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia that started in January last year and is set to last through 2018.
More immediate price support came overnight from the United states, where crude inventories
That’s slightly below the five year average of just over 420 million barrels.
U.S. production fell 290,000 barrels per day to 9.5 million bpd, the EIA said, foiling expectations of U.S. output breaking through 10 million bpd.
“Supply disruptions and falling U.S. and global inventories have driven crude oil higher,” said Ole Hansen, head of commodity strategy at Saxo Bank in a note.
“Such is the current mood that bullish news tends to get more attention than potentially bearish signals,” he added.
Bearish signals include a rise in fuel inventories as well as a fall in refined products profits in Asia, which are expected to hamper orders for new feedstock crude.
U.S. gasoline stocks
Singapore average refinery profit margins
And with the crude price up by more than 13 percent since early December, some analysts expect a downward price correction following the recent bull-run.
“Markets are getting a bit fatigued, and a healthy correction could be on the cards,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore.
(Reporting by Henning Gloystein; editing by Richard Pullin)
By Henning Gloystein