Oil drops as volatility concern counters reported inventory draw

Adjust Comment Print

The direction of the crude oil market today will be determined by three key factors: the U.S. Dollar, U.S. equity prices and the U.S. Energy Information Administration's inventories number.

The American Petroleum Institute (API) reported a draw of 1.050 million barrels of U.S. crude oil inventories for the week ending January 30, according to the API data.

The Energy Department recently said it expected that US oil production to reached a record 10.2 million barrels a day in January.

Brent for April settlement fell 2 cents to US$66.84 a barrel on the London-based ICE Futures Europe exchange.

Analysts note that the negative impact on the market by the news that the number of operating oil rigs in the US again increased by 6 units for the week and reached 765. If it were to turn red now from being green last month, this would deliver a psychological blow to the bulls. Last month, it forecast a 970,000 bpd year-over-year increase to 10.27 million bpd. China was the top oil importing country in the world past year as it brings more refining capacity online and fills strategic inventories, while domestic oil production continues to decline. These positions have been trimmed, but are still largely arrayed in favour of rising oil prices. The purchases of USA oil aren't likely to continue, given the U.A.E.'s own supply, Lipow said.

High-profile arrests made in Maldives amid state of emergency
Police said both men were under investigation for corruption and the court's top administrator had also been detained. In 2015 he was convicted under the anti-terrorism act of Maldives and sentenced to 13 years in prison.

China, the second-largest economy in the world behind the United States, reported in January that gross domestic product expanded 6.9 percent from 2016, beating expectations by about 0.2 percent.

That would be more than top producer Russian Federation which pumped on average 10.98 million bpd out of the ground in 2017.

On the flipside, USA production continues to notch new records and the narrative of higher Non-Opec output may seep into markets sooner rather than later and keep a lid on oil prices. Shipments from USA ports have increased from a little more than 100,000 barrels a day in 2013 to 1.53 million in November, traveling as far as China and the United Kingdom. However, front-month contracts fell further on Wednesday than further-dated futures, suggesting the EIA data dented that bullish view.

Crude stocks at the Cushing, Oklahoma, delivery hub USOICC=ECI fell by 711,000 barrels, EIA said.