Published: Thu, April 19, 2018
Markets | By Terence Owen

Oil prices settle higher as United States stockpiles drop

Oil prices settle higher as United States stockpiles drop

UAE Energy Minister says OPEC hopes to attract more producers to cuts deal.

Brent for June settlement added $1.13 to $72.71 a barrel on the London-based ICE Futures Europe exchange, after touching $72.84, the highest since April 16. USA crude and gasoline inventories fell last week, the American Petroleum Institute was said to report on Tuesday, in contrast to forecasts for a build in US government data later.

The Organisation of the Petroleum Exporting Countries (OPEC) has said that more than a $1 trillion of frozen capex or cuts were recorded in 2015 and 2016.

Nationwide crude inventories decreased 1.05 MMbbl last week in the USA, the API reported, according to people familiar.

"Oil inventories have built by just three million barrels so far this year, compared to over 50 million barrels a year ago", he said.

Stockpiles of gasoline also dropped by 3 million barrels, while distillates fuels including diesel declined by 3.1 million barrels, according to the administration.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.1 million barrels, EIA said.

Daily gasoline production averaged over 10.2 million barrels in the week to April 13 and distillate production stood at 5.1 million.

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Today's EIA report, scheduled to be released at 1430 GMT, is likely to trigger a volatile reaction since analysts forecast a rise of 625,000 barrels of crude stockpiles.

"Gasoline demand was very strong, virtually summer-like".

For next year, however, ING expects lower prices due to rising US crude output, which has jumped by a quarter since mid-2016 to over 10.5 million bpd.

May natural gas ended little changed at $2.739 per million British thermal units.

"Oil prices are holding near three-year highs (reached earlier in April) for the time being, and with inventories back in line with normal levels, the supply glut of the last few years appears to be over", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

Higher oil prices were good news for the TSX, which gained 176 points to close at 15,529.

"Production cuts by the Organization of the Petroleum Exporting Countries [OPEC] and 10 non-OPEC oil producers including Russian Federation, now in the second year of a two-year term, have combined with robust oil demand to drain a wide overhang in commercial oil supply held by advanced economies", said Phil Flynn, an analyst with the Price Futures Group in Chicago.

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