USA crude inventories seen rising for second week

Aaron Brown
February 9, 2018

Crude oil futures plunged Monday along with global stocks as the United States of America dollar rallied on expectations of interest rate hikes.

Russian Federation surpassed Saudi Arabia as China's largest source of foreign crude oil in 2016, exporting 1.2 million b/d to China in 2017 compared with Saudi Arabia's 1.0 million b/d.

Brent crude futures were down 14 cents at $65.37 a barrel by 0907 GMT, having hit a 2018 low of $65.10.

West Texas Intermediate for March delivery fell 45 cents to $61.34 a barrel on the New York Mercantile Exchange at 1:01 London.

As China continues to increase oil imports, more oil producers will be vying to raise their share of the world's top crude oil import market.

The 1.2-1.8 million-barrels-per-day cut in output, which was enforced from January 2017 in response to a sharp fall in crude-oil prices that hovered around $40 per barrel in late November, had some effect in driving prices higher. According to the Energy Information Administration, crude oil product could hit 9.9 million barrels per day in 2018, which surpasses the prior high reached in 1970 of 9.6 million barrels per day.

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"For oil, API's numbers are supportive". American crude in storage tanks and terminals increased by 1.9 million barrels last week as refiners shut or limited operations to conduct seasonal maintenance.

The U.S. also made it once into China's top ten suppliers list a year ago - in October - when it was ninth in terms of crude oil sales to China. However, oil prices pared some of the losses during the early sessions on Tuesday as stock markets rebounded slightly. "Adding on to list of stress for equity markets in the region, would also be the slide in crude prices for energy stocks", Pan added. "Any time you get a 1,500-point move in one day that's going to spook markets", said Phillip Streible, senior market strategist at RJO Futures.

The US exported about 700,000 barrels of light domestic crude in December to the UAE, the Census Bureau reported Tuesday.

Crude oil inventories were up 1.9 million barrels in the February 2 week to 420.3 million, the second weekly increase in a row after 11 weeks of consecutive drawdowns, said the Energy Information Administration (EIA) on Wednesday.

Support on Thursday came from the second outage in as many months on the 450,000 bpd Forties pipeline network, Britain's biggest, which supplies much of the crude underpinning Brent futures, although operator Ineos said it would likely restart the pipeline by Thursday.

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