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Oil Prices Up Then Down As Traders Book Profits

By:
Barry Norman
Published: Jan 28, 2016, 05:53 UTC

Crude oil inventories in the US reported lower than expected in the weekly EIA inventory which gave an edge up to prices. Crude oil soared above the $32

Oil Prices Up Then Down As Traders Book Profits

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Crude oil inventories in the US reported lower than expected in the weekly EIA inventory which gave an edge up to prices. Crude oil soared above the $32 level but dipped later as traders booked profits. This morning WTI is trading at 31.90 falling 40 cents. Brent oil is down 36 cents at 33.57 near its highest trading level this year.

Oil prices shot up after Russia indicated there was a possibility of co-operation with OPEC, fanning hopes for a deal to reduce a global oversupply that sent prices to the lowest levels in over a dozen years last week. A statement from Russia’s energy ministry said that they would be willing to speak with OPEC, moments after the head of Russia’s pipeline monopoly said officials have decided they should talk to Saudi Arabia and other OPEC members about output cuts. The top non-OPEC producer, Russia has in the past been unwilling to cut oil output, as it battles for market share with OPEC output leader Saudi Arabia.

“I remain skeptical, at the end of the day, about that happening as the oil producers are looking at the other guy to cut production while maintaining their own levels,” Andrew Lipow of Lipow Oil Associates said.

Crude fell in Asia trade Thursday as the market shifted attention back to oversupply concerns, after prices were briefly supported by speculation that large producers may be inching closer to a collective cut.

But falls were curbed by a weaker dollar following the Federal Reserve’s decision to keep its overnight interest rate unchanged and the release of a statement suggesting concern about global events had diminished but not squashed chances of a rate hike in March.

crude oil wed night

Saudi Arabia’s deputy minister for company affairs at the Ministry of Petroleum and Mineral Resources said on Thursday in Tokyo that OPEC estimates global oversupply to be around 2 million barrels per day.

“So it will take some time for the market to rebalance,” said Aabed A. Al-Saadoun. But he added that “we feel that the market will begin to come into balance in 2016 and that demand for energy in all forms will continue to increase”.

The EIA reported yesterday that US crude inventories climbed by 8.4 million barrels last week, higher than analyst expectations for a rise of 3.3 million barrels. That brought crude inventories to the highest level since the EIA began tracking the data. But crude stocks at the Cushing, Oklahoma, delivery hub fell by 771,000 barrels, which supported oil prices.

“Overall inventories rose by 8.38 million barrels. This helped to narrow the spread between Brent and WTI overnight,” ANZ said in a note on Thursday.

Chinese state-controlled energy giant China Petroleum & Chemical Corp. said Wednesday that oil and gas production slipped nearly 2% in 2015. Last week, China National Offshore Oil Corp. said it expects a net production of 470 to 485 million barrels of crude this year, compared with an estimated 495 million barrels in 2015.

Nymex reformulated gasoline blendstock for February–the benchmark gasoline contract–fell 67 points to $1.0390 a gallon, while February diesel traded at $1.0225, 27 points lower.

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