Oil Rises For Third Day As US Stockpiles Expected To Fall Again

Oil Jumps as Saudis Plan Export Cut

Analysts polled by Bloomberg gauged the decline in crude inventories at 3 million barrels, according to the median estimate.

The latest API data recorded a much larger than expected inventory draw of 10.2 million barrels, although there was some disappointment that gasoline stocks increased. In fact, the global Brent crude benchmark is down 13.3% and the U.S. West Texas Intermediate is down 14.4% in the year-to-date period as seen in the chart below.

That as "oil prices are returning to a high level of volatility", he added.

Oil prices have come under pressure from an oversupply of crude around the globe, brought on in part by rising production from US shale regions.

The third reason investors can look forward to an uptrend in oil prices is that Saudi Arabia has promised that it will reduce its oil exports.

In addition, Nigeria agreed to limit its production by curbing its output from 1.8 million bpd once it stabilises to that level. The cartel also got a commitment from some other non-OPEC countries such as Russian Federation and Venezuela to reduce their oil output.

What's obviously missing from the UAE's promise is its commitment to stick to the OPEC agreement, which deals with production rather than exports.

Since past year, oil prices witnessed sharp fall due to ongoing global glut has primarily been driven by a rise in U.S. production. Oil futures rallied on the EIA report and then retraced some gains, with Brent remaining above $50/bbl.

The West Texas Intermediate now trades around $46.02 per barrel and analysts believe that US producers will be forced to take some of their rigs out of commission if the WTI falls and stays in between the $40 to $45 per barrel range. USA gross ethanol exports averaged 96,000 b/d, a 40 percent higher figure than was seen during the same period the year before. In line with the speculations, the United States is contemplating on sanctioning Venezuela if it alters the OPEC nation's crude exports by halting dollar payments. Declining domestic output would raise Chinese crude oil imports in 2017 compared with 2016, analysts said.

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