Oil Price Fundamental Daily Forecast – Drillers Reduce Number of Rigs, but Production Still Hits Record HighU.S. oil drillers reduced the number of drilling rigs for a record 12 months in a row, despite fresh production highs. According to the EIA, U.S. production hit a record high of 12.9 million barrels per day and refinery runs slowed.
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower early Friday on light post-holiday selling. Some traders are saying the move is in reaction to renewed tensions between the United States and China and increasing doubts the two economic powerhouses will reach a Phase One trade deal agreement before new U.S. tariffs kick in on December 15.
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The two stories driving the price action throughout the month have been optimism over a U.S.-China trade deal, which helped dampen demand growth concerns, and the hope that OPEC and its allies would extend their production cuts into at least June 2020, which helped soften supply worries.
Inventory Reports at the Forefront
During this holiday-shortened week, however, the key price drivers have been weekly inventories reports. Here’s a recap.
On Tuesday, the American Petroleum Institute (API) reported a crude oil inventory build of 3.639 million barrels for the week-ending November 22. Analysts were looking for a 418,000-barrel draw in inventory.
The API also reported a build of 4.378 million barrels of gasoline for the week-ending November 22, compared to analyst expectations of a smaller build in gasoline inventories of 1.222-million barrels for the week.
Distillate inventories saw a draw of 665,000 barrels for the week, while the futures hub at Cushing, Oklahoma fell by 516,000 barrels.
On Wednesday, the U.S. Energy Information Administration reported a 1.6 million barrel build in U.S. crude stocks. Analysts were looking for a drop of 418,000 barrels.
The EIA also said U.S. gasoline inventories soared by 5.1 million barrels, compared with expectations for a 1.2 million-barrel gain.
Finally, according to the EIA, U.S. production hit a record high of 12.9 million barrels per day and refinery runs slowed.
Oil Drillers Reduce Number of Rigs
U.S. oil drillers reduced the number of drilling rigs for a record 12 months in a row, despite fresh production highs.
Drillers cut three oil rigs in the week to November 27, bringing the total count down to 668, the lowest since April 2017, energy services firm Baker Hughes Company said in data released two days early due to the U.S. Thanksgiving holiday on Thursday.