Oil Prices Steady After a Surprise U.S. Crude Inventory Draw

Oil prices on Thursday were stable, sustained by a surprise drop in the U.S. crude inventories as well as ongoing supply cuts led by Organization of the Petroleum Exporting Countries (OPEC), while a relentless increase in the U.S. oil output has threaten to undermine efforts to tighten the market.

The crude futures of U.S. West Texas Intermediate (WTI) were at $65.20 a barrel, it went up 3 cents from their last settlement.

Brent crude futures, however, were at $69.44 per barrel, dropping 3 cents from their previous close.

Both of the benchmarks are hovering just under their highest since February, after increasing near 10 percent from March lows.

Some of the support for crude futures came from currency markets, where the dollar went down as officials of Federal Reserve stuck to their view of three rate increases for this year, even as they delivered an expected rate hike.

According to the statement Energy Information Administration (EIA), the U.S. crude inventories went down 2.6 barrels last week to 428.31 million barrels.

“Oil... had a big session overnight although this wasn't just a function of the interest rate move. Inventory data for last week showed a surprise crude draw as well as significant drawdowns in both gasoline and distillates inventories,” William O’Loughlin, an investment analyst, stated.

Meanwhile, ING, a Dutch bank, said that the drawdown in the U.S. crude inventories was down to a fall in imports by around 500,000 barrels per day to an average of 7.08 million barrels per day last week, and an increase in exports by 86,000 barrels per day to an average of 1.57 million barrels per day.

In addition, the rates of refinery utilization increased above 90 percent since early last month.

Further supporting oil prices has been supply restraint led by OPEC and Russia, which started last year and it will continue for the rest of 2018.

On Wednesday, OPEC stated that the cuts were near to having the desired effect of bringing down the global inventories to five-year averages, although it gave little detail.

Goldman Sachs, a U.S. bank, on the other hand, said that OPEC was “likely to overshoot on the inventory rebalancing, and as a result, it saw Brent reaching $82.50 per barrel by mid-year.”

U.S. is now ahead of top exporter Saudi Arabia due to its fresh record of 10.4 million barrels per day, which is close to the 11 million barrels per day of Russia.

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