AGL 38.54 Increased By ▲ 0.97 (2.58%)
AIRLINK 129.50 Decreased By ▼ -3.00 (-2.26%)
BOP 5.61 Decreased By ▼ -0.03 (-0.53%)
CNERGY 3.86 Increased By ▲ 0.09 (2.39%)
DCL 8.73 Decreased By ▼ -0.14 (-1.58%)
DFML 41.76 Increased By ▲ 0.76 (1.85%)
DGKC 88.30 Decreased By ▼ -1.86 (-2.06%)
FCCL 35.00 Decreased By ▼ -0.08 (-0.23%)
FFBL 67.35 Increased By ▲ 0.85 (1.28%)
FFL 10.61 Increased By ▲ 0.46 (4.53%)
HUBC 108.76 Increased By ▲ 2.36 (2.22%)
HUMNL 14.66 Increased By ▲ 1.26 (9.4%)
KEL 4.75 Decreased By ▼ -0.11 (-2.26%)
KOSM 6.95 Increased By ▲ 0.10 (1.46%)
MLCF 41.65 Decreased By ▼ -0.15 (-0.36%)
NBP 59.60 Increased By ▲ 1.02 (1.74%)
OGDC 183.00 Increased By ▲ 1.75 (0.97%)
PAEL 26.25 Increased By ▲ 0.55 (2.14%)
PIBTL 5.97 Increased By ▲ 0.14 (2.4%)
PPL 146.70 Decreased By ▼ -1.70 (-1.15%)
PRL 23.61 Increased By ▲ 0.39 (1.68%)
PTC 16.56 Increased By ▲ 1.32 (8.66%)
SEARL 68.30 Decreased By ▼ -0.49 (-0.71%)
TELE 7.23 Decreased By ▼ -0.01 (-0.14%)
TOMCL 35.95 Decreased By ▼ -0.05 (-0.14%)
TPLP 7.85 Increased By ▲ 0.45 (6.08%)
TREET 14.20 Decreased By ▼ -0.04 (-0.28%)
TRG 50.45 Decreased By ▼ -0.40 (-0.79%)
UNITY 26.75 Increased By ▲ 0.35 (1.33%)
WTL 1.21 No Change ▼ 0.00 (0%)
BR100 9,809 Increased By 41.1 (0.42%)
BR30 29,711 Increased By 311.1 (1.06%)
KSE100 92,406 Increased By 468.1 (0.51%)
KSE30 28,874 Increased By 129.9 (0.45%)
Print Print 2019-10-24

Oil rises on surprise US crude drawdown, prospect of OPEC action

Oil rose about 2.5% on Wednesday after government data showed a surprise draw in US crude stocks and as the prospect of deeper output cuts by OPEC and its allies offered support.
Published October 24, 2019

Oil rose about 2.5% on Wednesday after government data showed a surprise draw in US crude stocks and as the prospect of deeper output cuts by OPEC and its allies offered support.

US crude stocks fell 1.7 million barrels last week as refineries hiked crude runs by 429,000 barrels per day (bpd) and oil imports fell, the Energy Information Administration said. Analysts had expected an increase of 2.2 million barrels.

Brent crude futures settled at $61.17 a barrel, up $1.47, or 2.5%. West Texas Intermediate (WTI) crude futures rose $1.49, or 2.7%, to end at $55.97 a barrel.

Oil prices had fallen earlier in the session after data on Tuesday from industry group the American Petroleum Institute showed US crude stocks rising more than analysts' expectations, by 4.5 million barrels to 437 million barrels.

The EIA's report "has put some buyers in the market, but it will be interesting to see if it lasts. While this will distract from demand destruction, the market will eventually come back to it," said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

The draw in US oil stocks appeared to have been caused by temporary market factors including higher refinery runs, rather than a fundamental firming of oil demand, and investors are still concerned about the global economy following reports of slowing growth in China and Europe, McGillian added.

A larger-than-expected decline in US gasoline stocks and lower net oil imports also supported prices, analysts said. Gasoline stocks fell by 3.1 million barrels, compared with analysts expectations of a 2.3 million-barrel drop.

"The continued decline in product inventory makes for a bullish report," said John Kilduff, a partner at Again Capital LLC in New York. "Gasoline numbers are summer-like; that's endemic of a good economy (in the US) and people driving to work."

Net US crude imports fell by 873,000 bpd to the lowest on record, while exports rose 435,000 bpd to a near record 3.7 million bpd, the data showed.

"No one really saw that coming because it came at a time when shipping rates were adding a considerable premium to the barrel," said Robert Yawger, director of energy futures at Mizuho.

Also helping to underpin prices, the Organization of the Petroleum Exporting Countries is mulling whether to deepen production cuts amid concerns of weak demand growth next year.

OPEC and other oil producers including Russia, a group known as OPEC+, have pledged to cut production by 1.2 million bpd until March 2020. OPEC and other non-members are scheduled to meet again Dec. 5-6.

"With the headwinds of strong US producer hedging and high freight rates fading, we expect stronger Brent time spreads and higher prices in coming weeks, with upside risk to our year-end $62 per barrel forecast," Goldman Sachs said in a note. The investment bank expects Brent prices to continue trading around $60 a barrel in 2020.

Copyright Reuters, 2019

Comments

Comments are closed.