Crude oil pushes toward strong back-to-back gains

Posted April 11, 2018

US crude inventories fell by 4.6 million barrels last week, compared with analysts' expectations for an increase of 246,000 barrels, EIA data showed on Wednesday.

Oil prices surged more than 3 percent on Tuesday as investors grew more confident the United States and China would resolve their trade dispute without damaging the global economy, while Middle East tensions and a weak dollar also supported prices.

Brent crude futures were at $67.43 a barrel, up 32c, or 0.5%.

The West Texas Intermediate (WTI) for May delivery rose 2.09 US dollars to settle at 65.51 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery added 2.39 dollar to close at 71.04 dollars a barrel on the London ICE Futures Exchange.

President Xi Jinping today promised to open China's economy further and lower import tariffs, striking a conciliatory tone on the trade tensions between China and the United States.

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Oil prices rallied more than two per cent on Monday after declining by about the same amount on Friday.

Departures from the accord would result in renewed sanctions against Iran, which would hurt its oil industry.

Oil prices have generally been supported by healthy demand as well as by supply restraint led by oil cartel Opec, which started in 2017 in order to rein in oversupply and prop up prices.

Traders said weekly US fuel inventory data would provide further market guidance.

Turning to data, unofficial figures from the American Petroleum Institute suggest that both crude and gasoline stocks were higher last week (the consensus expected stocks to keep falling).

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Monthly oil reports are also due out from the Organization of the Petroleum Exporting Countries on Thursday and the International Energy Agency on Friday.

Oil prices overall remain optimistic due to strong demand, as well as the supply curb by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation.

However, soaring United States crude production C-OUT-T-EIA, which has jumped by a quarter since mid-2016 to 10.46 million barrels per day (bpd), is threatening to undermine OPEC's efforts to tighten the market and prop up prices.

The U.S. late previous year overtook Saudi Arabia as the world's second-biggest crude producer.

"Oil prices remain rangebound with WTI oil right in the middle of the $60-$65 per barrel range that has largely held since January of this year", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

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