- Oil Prices Cut Losses Amid Market Strength
Oil prices traded roughly flat on Wednesday, shrugging off a report from the United States Energy Information Administration that showed the nation’s crude inventories rose last week and petrol stocks increased sharply.
Futures fell earlier after builds in the US inventories reinforced expectations that increasing shale output this year would reduce the impact of production cuts by OPEC and other major exporters, Reuters reported.
Again Capital founding partner John Kilduff said there was little to cheer in the report, but oil futures could not fight the strength on Wall Street on a day when the Dow crossed 20,000 for the first time ever and markets were broadly higher.
“It was a very bearish report, and it’s a cloud over this market, but it’s no asset class left behind at the moment,” Kilduff said.
Benchmark Brent crude rose fourcents a barrel to $55.48 by 12:05pm ET (1705 GMT). The US light crude was up nine cents at $53.27.
The US crude stockpiles rose by 2.8 million barrels in the week through January 20, matching analysts’ expectations and roughly in line with an earlier report from the American Petroleum Institute.
The US gasoline futures fell to a session low but pared losses after EIA reported gasoline stocks rose by 6.8 million barrels, compared with analysts’ expectations in a Reuters’ poll for a 498,000-barrel gain.
Distillate stockpiles, which included diesel and heating oil, increased by 76,000 barrels, versus expectations for a one million-barrel drop, the EIA data showed.
Oil prices have found support in recent weeks from plans by the Organisation of the Petroleum Exporting Countries and other producers to reduce output.
Around 1.5 million barrels per day (bpd) has already been taken out of the market from about 1.8 million bpd agreed by oil majors starting on January 1, energy ministers said on Sunday, as producers look to reduce oversupply.
Bernstein Energy said global oil inventories declined by 24 million barrels to 5.7 billion barrels in the fourth quarter of last year from the previous quarter. The amount remaining equates to about 60 days of world oil consumption.