Oil Prices Diverge as Investors Mull U.S. Crude
February 20 2018 - 6:03PM
Dow Jones News
By Neanda Salvaterra
Oil prices rose to a two-week high on Tuesday, as
lower-than-expected inventories buoyed market optimism.
Light, sweet crude for March delivery rose 22 cents, or 0.4%, to
$61.90 a barrel on the New York Mercantile Exchange, its fourth
consecutive session of gains. Brent, the global benchmark, lost 42
cents, or 0.6%, to $65.25 a barrel.
Investors are assessing conflicting U.S. data from last week
about surging U.S. shale output coupled with a lower-than-expected
build up in U.S. stocks and falling oil inventories at Cushing,
Okla., which have declined by nearly 50%, according to analysts at
Standard Chartered.
"You still have those low stocks in Cushing supporting WTI. On
the other hand, you have stock builds in the U.S. Gulf," said
Olivier Jakob, managing director of Petromatrix, an oil research
firm in Switzerland.
Meanwhile, refinery maintenance in several regions including
Europe is putting a damper on demand for Brent crude causing a
divergence of the crude grades.
"There are also some signs of physical pressure in the crude oil
market in Europe, partly due to lower crude oil demand due to
refinery maintenance," Mr. Jakob said.
Still, oil found support last week after resource-rich Saudi
Arabia reaffirmed its partnership with the Organization of the
Petroleum Exporting Countries and external producers such as Russia
in their efforts to eliminate about 2% of global supply.
Crude prices closed at a one-week high Friday, after having
fallen by more than 12% in the first weeks of February, weighed
down by concerns of surging U.S. output eclipsing demand as
forecast by the International Energy Agency.
OPEC and other analysts have issued differing views from the
IEA. Some analysts say that shale may not be enough to meet future
demand.
"We are closer to OPEC's numbers," said Paul Horsnell, the head
of commodity research at Standard Chartered. "We do see demand
exceeding 1.6 million barrels a day for 2018, and we see non-OPEC
supply outside North America falling both this year and the next
year."
The American Petroleum Institute issues its forecast on the U.S.
crude inventory on Wednesday, and the U.S. Energy Administration
releases its weekly inventory report on Thursday.
Gasoline futures edged down to $1.7503 a gallon and diesel
futures advanced 0.9% to $1.9277 a gallon.
Stephanie Yang contributed to this article
Write to Neanda Salvaterra at neanda.salvaterra@wsj.com
(END) Dow Jones Newswires
February 20, 2018 17:48 ET (22:48 GMT)
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