Oil Prices Up with Further Upside Expected on EIA Inventories Data

Oil Prices Up with Further Upside Expected on EIA Inventories Data
Written by:
John Adam
23rd February 2017

Oil prices were on the up today on U.S. inventories data released by the American Petroleum Institute showing a fall from last week’s record highs. While data that will come today from the U.S. Energy Information Agency is the more closely watched weekly report, prices have already received a boost on hopes that the EIA report will confirm falls. The API reported a fall in crude inventories of 884,000 barrels and 893,000 less barrels of gasoline which sent crude prices up 70 cents to $56.54, 1.25% gain.

That recovered the larger part of yesterday’s 82 cents drop and today’s EIA data confirming inventories depletion would be expected to complete the fight back and send Brent crude prices to near the top of the $4 range that has held so far this year. WTI added 1.52%, or 82 cents, to change hands on the New York Mercantile Exchange for $54.29.
A decline in inventories confirmed today, with particular attention paid to import figures, would be accepted as evidencing that OPEC supply cuts are finally beginning to demonstrate a visible impact on global supply levels.

In terms of longer term outlook, a presentation made by BP chief economist Spencer Dale yesterday at BP’s 2017 Energy Outlook, posited that recoverable oil supplies mean that oil prices will likely never reach $100 a barrel again. Dale’s research indicates that there is enough recoverable oil at present to comfortably meet global demand twice over until 2050.
Gold prices are relatively steady since yesterday with spot gold incrementally moving 0.1% up to $1,236.30 oz. Federal Reserve minutes from the U.S. central bank’s most recent meeting suggested that while the next interest rate hike will come ‘fairly soon’, the chances are that it will not be as soon as March. While the Fed did not take that option off the table its likelihood is now considered slim which helped put at least a temporary floor under gold prices. Gold futures had a stronger gain, up 0.4% to $1237.6 oz.

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