Oil Prices Rise on Lower U.S. Stockpiles
April 18 2019 - 4:02PM
Dow Jones News
By Dan Molinski
-- Oil prices edged higher Thursday on declining U.S.
inventories--a trend that could continue as the summer-driving
season approaches and refineries start boosting both their crude
intake.
-- West Texas Intermediate futures, the U.S. oil benchmark,
ended 0.4% higher at $64.00 a barrel on the New York Mercantile
Exchange. With markets closed Friday for the Good Friday holiday,
oil prices ended the week 0.2% higher, marking a seventh straight
weekly gain, the longest streak since February 2014.
-- Brent crude, the global oil benchmark, closed up 0.5% at
$71.97 a barrel on London's Intercontinental Exchange.
HIGHLIGHTS
U.S. Supplies: Prices were higher Thursday morning as markets
reacted to Wednesday's weekly report from the Energy Information
Administration, which showed U.S. oil inventories fell by 1.4
million barrels last week--the first decline in four weeks.
The reduction in crude inventories was largely a result of a
drop in crude-oil imports rather than U.S. refineries processing
more oil. Data showed U.S. refineries are operating at less than
88% of their potential versus typical capacity utilization rates of
well over 90% for this time of year. But those rates are expected
to rise in the coming weeks, which could reduce the amount of oil
in storage.
"Refinery utilization remains relatively low at 87.7% with
turnaround season under way, exacerbated by a series of ongoing
unplanned outages," said analysts at Houston-based Tudor Pickering
Holt & Co. in a research note. "We expect utilization to trend
higher as we shift into May as driving season picks up."
Tight Range: Despite oil's modest gains Thursday, U.S. prices
over the past week have mostly been rangebound. They have yet to
surpass a five-month closing high of $64.61 a barrel reached April
10. That has led to speculation that the price rally may run out of
steam. WTI is up 6% this month and more than 40% this year.
"The complex is still in the late stage of a 40% bull move in
our opinion and is increasingly in need of assistance from either
the macroeconomic or geopolitical support," said Jim Ritterbusch,
president of Ritterbusch & Associates, in a note to clients.
"All factors considered, we are maintaining a short-term bullish
bias while also cautioning against fresh aggressive entry into the
long side at the present time."
INSIGHT
Schlumberger: Oil-field services giant Schlumberger on Thursday
reported a 20% fall in net income but better-than-expected revenue
for the first quarter. Chief Executive Paal Kibsgaard predicted oil
prices will continue to rise this year due to increased global
demand and slowing production growth in certain regions.
"From a macro perspective, we expect the oil market sentiment to
steadily improve over the course of 2019, supported by a solid
demand outlook combined with the OPEC and Russia production cuts
taking full effect, slowing shale oil production growth in North
America, and a further weakening of the international production
base as the impact of four years of underinvestment becomes
increasingly evident," the CEO said.
Mr. Kibsgaard also warned that shale producers face geological
issues that could slow production, as drillers try to cram as many
wells as possible onto their land and newer wells interfere with
existing ones.
AHEAD
-- The EIA releases its weekly oil inventory report on Wednesday
at 10:30 a.m. ET.
--Christopher Matthews contributed to this report.
Write to Dan Molinski at Dan.Molinski@wsj.com
(END) Dow Jones Newswires
April 18, 2019 15:47 ET (19:47 GMT)
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