Oil prices rise on US crude inventory draw
SINGAPORE: Oil prices rose on Wednesday on expectations of a US crude inventory draw, although trading activity was muted as markets start to wind down ahead of the Christmas weekend.
US West Texas Intermediate (WTI) crude oil futures were trading at $53.73 per barrel at 0756 GMT, up 43 cents, or 0.81 per cent from their last settlement.
International Brent crude oil futures were at $55.59 a barrel, up 44 cents, or 0.79 per cent.
Traders said the higher prices were largely due to an expected reduction in US crude oil inventories, which will be reported late on Wednesday.
Jeffrey Halley, analyst at futures OANDA in Singapore said US crude stocks were expected to fall by 2.563 million barrels.
Into next year, French bank Societe Generale said in its December oil market outlook that the agreement between the Organization of the Petroleum Exporting Countries (Opec) and other leading oil producers such as Russia to cut production by almost 1.8 million barrels per day (bpd) from January 2017 “should push crude prices from the $40-50 range in 2016 to the $50-60 range in 2017.”
The low price expectations for 2017 come as oil markets are expected to remain well supplied despite the planned output cuts.
Russia’s 2016 oil output is expected to total 547.5 million tonnes (11 million bpd), a 2.5 per cent increase from the previous year, Energy Minister Alexander Novak told reporters late on Tuesday.
Taking advantage of plentiful and relatively cheap crude, refiners especially in Asia are churning out more fuel than the market can absorb. China exported 1.47 million tonnes of diesel in November, up 61.8 per cent from the same month a year earlier, customs data showed on Wednesday, as even fuel thirsty China struggles to cope with the output from its refiners. — Reuters