EIA raises Brent price forecast to $55 for 2017

Samuel SharpFeb 10, 2017

While OPEC members implement pledged cuts and Russian Federation says its own reductions are ahead of schedule, USA production has edged higher as drillers targeting crude boosted the rig count to the most since October 2015.

In its report Tuesday, the EIA said it expects "the oil market to be relatively balanced in 2017 and 2018, with inventory draws averaging 0.1 million barrels a day in 2017 and builds averaging 0.2 million barrels a day in 2018". Global oil output was cut by 1,4 million bpd last month, said Russian Energy Minister Alexander Novak.

The rise in U.S. output had lessened the impact of production-cut by OPEC and Russian Federation.

Igor Yusufov, a former energy minister of Russian Federation who supervised Moscow's first deal with OPEC, considers that Russian Federation and OPEC should involve the United States in the global deal as the country is intensifying its shale production. Stockpiles at Cushing, Oklahoma, the biggest U.S. storage hub and the delivery point for WTI, climbed 1.14 million barrels. US light crude settled 66 cents higher at $53 a barrel.

Light sweet crude oil (WTI) futures gained 0.13 dollar or 0.25 percent to close at USD 52.91 a barrel at the New York-based commodity exchange NYMEX.

Benchmark Brent crude rose to $55.72/bbl while United States light crude reached $53.14/bbl. The global benchmark crude traded at a $2.40 premium to April WTI.

Energy companies were among the best performers on the Standard & Poor's 500 Index.

BP reported an annual loss of $542mn in its oil and gas production division, known as upstream, while profits for the refining and trading division were down 25% at $5.6bn.

As per the EIA, the U.S commercial crude oil inventories surged by 13.8 million barrels to stand at a total of 508.6 million barrels.

Oil prices are staying low on data showing USA crude inventories have increased ahead of expectations.

Gasoline prices also got a boost due to a surprise decline in inventories.

Gasoline stockpiles fell 869,000 barrels, pushing refining margins higher. The contract touched $51.22, the lowest intraday level since January 19.

Gasoline futures for March delivery climbed 2.3 per cent to $US1.5215 a gallon. The contract advanced 4.4% on Wednesday, the biggest gain since November.

"If we continue to see a decent compliance level in the 85 to 95 percent range from OPEC, and we do see inventories cleaning up in the USA, we may get another leg up", Chirichella said.

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