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West Texas Intermediate increased for the second day in a row with investors weighing the surprise fall of inventories in the US against the unchanged production of the Organization of Petroleum Exporting Countries.
Futures of the American crude oil benchmark advanced by as much as 0.6%, or 40 cents, for a price per barrel of $67.78. It was trading early afternoon Sydney time at $67.68 on the New York Mercantile Exchange via electronic trading. The contract climbed up by 50 cents yesterday to $67.38. Trading volume was around 62% less than the 100 day average. WTI has fallen by 31% so far this year.
Data from the Energy Information Agency (EIA) from yesterday showed that stockpiles of crude oil in the US decreased by 3.69 million barrels last week to bring the total down to 379.3 million. Analysts had earlier expected supplies to grow by 1.75 million. Meanwhile, the second biggest member of the OPEC, Iraq, has agreed to a deal with the Kurdish Regional Government which may increase the daily global supply by 300,000 barrels.
Supplies at Cushing, Oklahoma, the delivery point for contracts traded in New York also fell by 694,000 barrels to 23.9 million to post its first decline in four weeks. Production levels in the US have reached 9.08 million barrels per day, the highest since January 1983, according to the EIA.
Oil prices have fallen into a bear market including an 18% decline in November behind the OPEC’s decision to maintain its current daily output.
Chief strategist Michael McCarthy from Sydney’s CMC Markets says that, “The price action is showing signs of stabilization around current levels. The longer we hang around these levels, the more likely it is we’ll see a rally back above $70 for West Texas.”
Bent, the European benchmark, increased by as much as 0.6%, or 40 cents, for a price per barrel of $70.32. It declined by 62 cents yesterday to its lowest since May 2010 at $69.92. It traded with a premium over WTI of $2.60 in London’s ICE Futures Europe exchange.
