On Thursday, oil prices decline after official data displayed U.S. crude and gasoline stockpiles increase sharply, although indications that OPEC and other producers are holding the line on production cuts are helping support prices.
Brent crude futures dropped 28 cents, or 0.5%, to $56.52 a barrel as of 0410 GMT after settling up $1.22 in the prior session.
Front month futures for West Texas Intermediate declined 33 cents, or 0.6%, at $53.55 after increasing $1.07 at the day before.
The previous week, U.S. crude stocks increased by an unexpected 6.5 million barrels to 494.76 million barrels, as refiners let stocks increased more in a seasonally slow season for output, the Energy Information Administration stated on Wednesday.
The increase in stocks far exceeded analysts’ expectations for a surge of 3.3 million barrels.
“Obviously we saw some solid gains in prices in the previous session so there might be a little bit of profit-taking in the Asian session after the market rallied unexpectedly,” stated by a market analyst . He further added, “But prices are still very much range-bound.”
In comparison with analyst expectations in a Reuters poll for a 1-million barrel gain, gasoline stocks increased by 3.9 million barrels. Gasoline demand has been seasonally sluggish, down 5.7% from a year ago over the past four weeks.
However, prices were strengthened by indications that producers from the Organization of the Petroleum Exporting Countries (OPEC) and others are curbing production and geopolitical tensions between the United States and Tehran after Iran’s latest missile test.
On Additional News
On the NYMEX, delivery of crude oil in March eased 0.59% to $53.56 a barrel, whereas on the Intercontinental Exchange in London, delivery of Brent oil for March was last quoted flat at $56.59 a barrel. Markets in China were close for the Lunar New Year holidays.
Earlier this week, a Reuters survey found high compliance by the Organization of the Petroleum Exporting Countries OPEC with agreed reduction.
The restrictions follow previous year’s agreement to lower supplies by a combined 1.8 million barrels per day (bpd) to prop up that prices remain at approximately half their mid-2014 levels.
That came even as oil production growth in the Middle East is set to stay strong, adding 2.44 million barrels per day (bpd) during 2017-2021, reported on Thursday, by energy consultancy BMI Research.
Growth will be headed by the national oil companies and supported by a large proven reserve base and economical structures. In 2017, the production in North America will return to growth, the report added.
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