Oil gains on drop in US crude inventories

14 November 2019 (Last Updated November 14th, 2019 10:58)

Oil prices have edged-up after industry data showed decline in US crude stocks and OPEC comments on US shale growth.

Oil prices have edged-up after industry data showed decline in US crude stocks and OPEC comments on US shale growth.

Brent futures rose 47 cents to $62.84 a barrel while US West Texas Intermediate (WTI) crude gained 47 cents $57.59 a barrel, reported Reuters.

Secretary General of the Organization of the Petroleum Exporting Countries (OPEC) Mohammad Barkindo said that there would likely be downward revisions of supply going into 2020 from US shale. He added that some of the US shale oil firms may see output growing by only 300,000-400,000bpd.

Commenting on OPEC’s forecast of oil production which is not part of the group, OCBC Bank Singapore economist Howie Lee was quoted by Reuters as saying: “I don’t see much changes in supply so prices are still trading within the same range from the start of November.”

US Energy Information Administration (EIA) forecasts were also in contradiction to Barkindo’s comments.

According to American Petroleum Institute (API) report, crude inventories dropped by 541,000bbls when compared to analysts’ expectations of an increase of 1.6Mmbbls, while API data revealed that gasoline and distillates inventories have been increased.

OPEC and its allied companies, including Russia, are intending to meet in December 2019 to discuss production cuts of 1.2Mbpd. Barkindo said that it was too early to conclude if output cuts would be further needed.

Lee added: “They have made it quite clear that they are not reducing production further.

“What Saudi can do now is to urge compliance among members especially Iraq and Nigeria. If they can comply, then they can talk about cuts.”