Oil prices rise after U.S. crude inventories fall

Eileen GuzmanApr 07, 2018

OIL held near $63 a barrel after U.S. crude stockpiles declined and trade tensions between the United States and China showed tentative signs of easing.

Oil prices saw a wide variation over the past week, regaining some losses on Wednesday after the United States released data showing a surprise fall in crude inventories.

Futures in NY slipped as much as 2.1 percent to the lowest intraday price since March 20.

Moreover, the oil output in Venezuela continues to decline.

Prices were also helped by a turnaround in the USA stock market.

"While there was a surprise drop in USA stockpiles, we should note that they have been steadily rising since January this year", Min Byungkyu, a global market strategist at Yuanta Securities Co., said by phone in Seoul.

"People are focused on the fundamentals of oil and they are very strong right now", Phil Flynn, senior market analyst at Price Futures Group Inc.in Chicago, said by telephone.

West Texas Intermediate for May delivery gained 56 cents to settle at $64.94/bbl on the New York Mercantile Exchange, with prices posting a third-straight quarterly gain, the longest streak since 2011. The contract rose 50c to $63.51 on Tuesday. Total volume traded was 12 above the 100-day average.

Yet fund managers hold more bets on a sustained rise in the price of Brent crude oil than at any time, data from the InterContinental Exchange shows. Prices slipped 10 cents, or 0.2 percent, to $68.02 Wednesday. The global benchmark traded at a $5.33 premium to WTI.

Oil fell after China said it would levy tariffs on $50 billion of US imports in retaliation against measures by President Donald Trump, fanning concerns that economic growth and fuel demand could be hurt.

Domestic production rose by 27,000 barrels per day to 10.46 millions barrels a day.

Oil prices had already been under pressure earlier in the day ahead of a possible rise in USA inventories, as reported by the Energy Information Administration (EIA) later on Wednesday.

China today confirmed a 25 per cent levy on $50bn (£36bn) worth of US goods, including vehicles and agricultural products like soybeans, in response to US President Donald Trump's planned tariffs on on Chinese goods. Trump also tried to quell trade war fears on Wednesday, Tweeting that "We are not in a trade war with China".

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