Oil prices rise on signs of tightening market
By Christopher Johnson
Brent crude oil was up 40 cents at $52.06 a barrel by 0715 GMT. U.S. light crude was 35 cents higher at $47.72.
“U.S. crude oil stocks have been falling consistently in recent weeks,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.
“If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia,” he added.
U.S. commercial crude inventories have fallen by almost 13 percent from their March peaks, to 466.5 million barrels.
U.S. crude production has broken through 9.5 million barrels per day (bpd), its highest since July 2015, but analysts say growth may slow as U.S. energy firms cut the number of rigs drilling for new oil.
“It looks like the growth in U.S. production is quickly running out of steam and, all else being equal, this should be good news for OPEC and the price of oil,” said Erik Norland of CME Group, a major commodity exchange.
The Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back around 1.8 million bpd of output between January this year and March 2018 in order to tighten supplies and prop up prices.
The weekly rollout of data on U.S. inventories starts later on Tuesday, giving the market a chance to see if the recent downward trend in U.S. crude stocks is continuing.
Industry group the American Petroleum Institute will publish statistics on crude inventories and refinery operations for last week at 4:30 p.m. EDT (2030 GMT).
On Wednesday, it will be the turn of the U.S. government’s Energy Information Administration.
U.S. crude inventories are expected to have fallen for an eighth straight week and drop by 3.4 million barrels, a Reuters poll shows.
“Another decline in U.S. crude stocks may push prices somewhat higher again, but the upside may be limited – especially if U.S. crude production ticks higher again,” said Hans van Cleef, senior energy economist at ABN AMRO Bank N.V. in Amsterdam.
(Additional reporting by Henning Gloystein and Aaron Sheldrick in Singapore; Editing by Edmund Blair)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)