Oil Gains Ground After Bullish Inventory ReportOil is trying to settle above the resistance at $48.65.
Oil Video 30.12.20.
Crude Inventories Decline By 6.1 Million Barrels
Yesterday, API Crude Oil Stock Change report indicated that crude inventories decreased by 4.8 million barrels, providing some support to the oil market.
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Today, API estimates were confirmed by the EIA Weekly Petroleum Status Report which showed that crude inventories declined by 6.1 million barrels. Meanwhile, gasoline inventories decreased by 1.2 million barrels while distillate fuel inventories increased by 3.1 million barrels.
Currently, crude inventories remain 11% above the five-year average for this time of the year so there is plenty of work to do. However, another decrease in inventories is encouraging.
The decline in imports, which were down by 238,000 barrels per day (bpd) compared to the previous week, provided some support but it looks like healthy demand and stagnant production were the main reasons for the crude inventory draw.
According to EIA, U.S. domestic oil production remained unchanged at 11 million bpd. This is good news for oil bulls as the potential increase in U.S. oil production remains one of their main fears.
It remains to be seen whether U.S. oil producers will increase production in response to higher price levels, but it looks like production levels will remain near 11 million bpd if oil continues to trade in the $45 – $50 range.
OPEC+ Compliance With The Production Cut Deal Was 101% In November
According to a recent Reuters report, OPEC+ compliance with the production cut deal in November exceeded 100%. One of the Reuters sources indicated that OPEC’s compliance stood at 104% while the compliance of other members, including Russia, was at 95%.
This is a very good result for the group which shows that OPEC+ members are committed to support the market at a time when demand for oil remains fragile due to the second wave of coronavirus.
Strong compliance with the production cut deal suggests that OPEC+ will not experience any major issues when it increases production by 500,000 barrels per day in January 2021.
At this point, the continued support from OPEC+ remains a very important catalyst for the oil market.
For a look at all of today’s economic events, check out our economic calendar.