API reports another large crude draw

Oil slips towards $69 ahead of US supply report

United States crude inventories fell by 5.1-million barrels in the week ended January 12 to 411.5-million, according to the American Petroleum Institute on Wednesday.

While enjoying the extra revenues, the Organization of the Petroleum Exporting Countries, Russia and their allies remain wary of sending prices so high that USA shale production climbs even faster and the market becomes oversupplied again.

US West Texas Intermediate (WTI) crude futures were at $64.25 a barrel, up 28c or 0.4% from their last settlement.

Both contracts climbed to their highest levels since December 2014 this week with Brent reaching $70.37 on Monday and WTI up to $64.89 on Tuesday.

Congo Republic plans to join the Opec oil cartel, the government said, as the former French colony presses ahead with projects that could help it become the third-largest oil producer in sub-Saharan Africa. The Brent benchmark was trading up 0.10 percent at 69.45 dollars.

In Nigeria, the militant group Niger Delta Avengers threatened to launch attacks on the country's oil sector in the next few days.

Moreover, emir of Kuwait Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah urged participating countries to continue to show faith in implementing the voluntary production adjustments in 2018, until the common objective of returning OECD (Organization for Economic Co-operation and Development) inventories to the five-year average is achieved and the supply-demand balance is restored.

Oil slips towards $69 ahead of US supply report

Despite this, analysts warned that the recent oil price rally, which has lifted crude by 14% since early December, may be about to run out of steam.

The API data also showed a well-supplied fuel product market, which could mean lower crude demand going forward.

USA crude inventories were estimated to have fallen 3.5 million barrels in the week ended January 12, according to a Reuters poll.

On the economic front yesterday, the U.S. industrial production increased more than expected in December as unseasonably cold weather at the end of the month boosted demand for heating. USA refinery crude runs fell by 420,000 barrels a day and refined product stocks rose.

OPEC and Non-OPEC members agreed during a meeting in Vienna in Dec 10, 2016 to limit oil output in reaction to a drop in oil prices at the time.

This week, the API reported another, although smaller, build in gasoline inventories of 1.782 million barrels for the week ending January 12.




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