Oil Fluctuates Between Gains and Losses on Inventory Data
March 01 2017 - 12:34PM
Dow Jones News
By Stephanie Yang and Neanda Salvaterra
Oil prices swung between gains and losses on Wednesday, as
investors digested inventory data that did little to ease concerns
over building supply in the U.S.
Light, sweet crude for April delivery was recently down 4 cents,
or 0.1%, at $53.98 a barrel on the New York Mercantile Exchange,
trading as high as $54.44 and as low as $53.85 a barrel following
the most recent storage report. Brent, the global benchmark, fell 2
cents to $56.50 a barrel.
On Wednesday, the U.S. Energy Information Administration
reported an increase of 1.5 million barrels in the week ended Feb.
24, compared to estimates for an increase of 2.4 million barrels
from analysts and traders surveyed by The Wall Street Journal.
While the build in inventory was less than expected, the rise in
storage took crude stockpiles to a new record high of 520.2 million
barrels, according to Citi research.
"It's a very, very mixed report," said Kyle Cooper, a consultant
at ION Energy Group in Houston. "If you want to find some bullish
... [or] bearish nuggets, you certainly can."
Stocks of oil products also remain high, analysts noted.
Gasoline inventories declined by 500,000 barrels, less than the
expected 1.6 million barrels on average. Distillate inventories
fell by 900,000 barrels, coming in line with analyst
expectations.
Oil prices have been caught between better-than-expected
compliance in limiting production among members of the Organization
of the Petroleum Exporting Countries, and concerns over a surge in
activity from U.S. shale producers.
"Let's face it, we've got a lot of crude oil and we're pumping
it out like there's no tomorrow," said Mark Waggoner, president of
brokerage Excel Futures.
Mr. Cooper said he is more inclined to be bearish as U.S. oil
production has risen to the highest in nearly a year. However,
questions remain on how well OPEC will adhere to the agreement with
other major producers to cut 2% of global output.
"The market has been very, very choppy despite what appears to
be pretty good OPEC compliance in February," he said. "Despite
these high inventory levels, the market's not breaking down
either."
JBC Energy analysts estimate that OPEC crude production
increased in February compared to the previous month, with a
compliance rate of about 89%. Market observers say even though the
current rise in U.S. crude oil output still lags behind the
reductions made by OPEC and Russia, the gap could shrink if U.S.
production maintains its current rate.
According to oil field services firm Baker Hughes Inc., U.S.
producers added five new oil rigs last week. That brings the total
figure of active drilling rigs to 602, "the highest number since
October 2015, "noted JBC Energy.
Gasoline futures were recently down 1.8% at $1.6356 a gallon,
and diesel futures were down 0.3% at $1.6356 a gallon.
--Jenny W. Hsu contributed to this article.
Write to Stephanie Yang at stephanie.yang@wsj.com and Neanda
Salvaterra at neanda.salvaterra@wsj.com
(END) Dow Jones Newswires
March 01, 2017 12:19 ET (17:19 GMT)
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