Oil up for week on Libya woes, falling U.S. supply

Oil up for week on Libya woes, falling US supply

Oil up for week on Libya woes, falling US supply

Oil dipped yesterday with Brent trading at $67.44 per barrel and US West Texas Intermediate crude at $63.79 before weekly data that is forecast to show rising US crude inventories, although investor confidence in OPEC's ability to curb output helped stem the price slide.

"Today and this week are going to be critical to answering the question, is this a market correction or is this a resumption of an uptrend?" said Walter Zimmerman, chief technical analyst at United-ICAP.

So, the price of North sea Brent crude oil on Monday morning, February 26, overcame a mark of 67 dollars per barrel.

WTI for April delivery on Friday rose US$0.78 to settle at US$63.55 a barrel on the New York Mercantile Exchange, the highest level in more than two weeks.

Still, hedge funds and money managers lifted their bullish wagers on U.S. crude oil for the first time in four weeks, data showed on Friday.

The April contract LCOc1 settled down 85 cents, or 1.28 percent, at $65.78 a barrel ahead of expiration. While Canadian production has continued to rise, reflecting past investments, pipeline capacity constraints have limited producers' options for moving their products to US markets.

He said, "The annual production of crude oil in months from January to March will be below the output caps exporting less than 7 million barrels per day".

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The global oil market is rebalancing and the decline in inventories is expected to continue this year, Saudi Arabian Minister of Energy and Industry Khalid Al-Falih on Friday told reporters in New Delhi.

Most of this liquidation seems to be attributable to profit-taking after the big rally in oil prices over the last seven months.

On 1 January 2017, after nearly a year of shuttle diplomacy, OPEC and non-OPEC producers reached their first deal since 2001 to reduce oil output jointly by nearly 1.8 million barrels a day. The second quarter oil market is preparing for the driving season.

Oil producers from OPEC and non-OPEC countries struck a historic deal in late 2016 to cut output by 1.8 million barrels per day, following a surplus in crude supply that sent prices crashing in 2014. Analysts had expected an increase of 2.1 million barrels.

That doesn't mean US crude exports will necessarily fall back to the old levels before previous year, below 1 mb/d, for example. "Investors are now keeping a close watch on the USA inventory number as growth has been rather slower than expectations".

Consider this: in January 2017, USA crude oil production mounted to 8.82 million barrels per day. "If those numbers change consistently to the upside, we would see the market react in the other direction".

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