Oil Hits Two-Year Highs as U.S. Stockpiles Drop
November 22 2017 - 1:08PM
Dow Jones News
By Stephanie Yang
Oil prices rose to the highest level in more than two years
Wednesday, boosted by a drop in U.S. crude stockpiles.
Light, sweet crude for January delivery gained 96 cents, or
1.7%, to $57.79 a barrel on the New York Mercantile Exchange, on
track for the highest close since June 2015. Brent, the global
benchmark, advanced 50 cents, or 0.8%, to $63.07 a barrel.
On Wednesday, the U.S. Energy Information Administration
reported that crude inventories fell by 1.9 million barrels in the
week ended Nov. 17, exceeding analyst expectations for a drop of
1.5 million barrels. The data helped ease concerns over increasing
supply from the U.S. as global supply has declined.
Prices were also helped by disruptions in TransCanada Corp.'s
Keystone pipeline, which leaked about 5,000 barrels of oil last
week. Analysts said this contributed to the decline of crude
stockpiles at Cushing, Okla., an important hub for oil storage and
pricing.
The U.S. data temporarily drew attention away from a coming
meeting between the Organization of the Petroleum Exporting
Countries and other global producers, set for Nov. 30. Oil prices
have risen in recent weeks on expectations that the group will
extend a deal to curb production past March 2018.
"We continue to see support from the optimism that you'll see an
extension agreed to next week," said Gene McGillian, research
manager at Tradition Energy. Along with healthy demand, "those two
factors still seem to be outweighing that U.S. and North American
production is going to be increasing," he said.
U.S. production also reached another record weekly high last
week, according to the EIA.
"We're going to need to see this kind of [reduced inventories]
data every week to start another leg on this rally," Mr. McGillian
said.
Oil prices pared gains briefly following the EIA report, as the
crude draw fell short of estimates from the American Petroleum
Institute for a decline of 6.4 million barrels.
"The market's rather thin today," said Donald Morton, senior
vice president of Herbert J. Sims & Co., who oversees an energy
trading desk. "Overall I think these numbers are more bearish than
bullish."
Analysts have warned that with bullish speculative bets on oil
near record highs, the market could be underwhelmed by an
announcement from OPEC and vulnerable to a selloff next week. While
most market participants are betting on an extension, more
uncertainty surrounds the length of any such deal.
"The issue is, is it 3 or is it 6 or is it 9 [months]?" said Mr.
Morton.
The EIA reported that gasoline stockpiles were unchanged last
week, and distillate stockpiles rose by 300,000 barrels.
Gasoline futures fell 0.2% to $1.7695 a gallon and diesel
futures were trading near flat at $1.9361 a gallon.
Write to Stephanie Yang at stephanie.yang@wsj.com
(END) Dow Jones Newswires
November 22, 2017 12:53 ET (17:53 GMT)
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