Oil futures up driven by falling U.S. crude stockpiles

Oil prices

The price of oil rebounded on Thursday’s session on the back of strong demand in the stateside. However some analysts signalled that there will be further problems on oversupply that would later on drag the markets lower.

Last Wednesday, oil futures slipped as much as 4 percent due to the heightened exports coming from OPEC, in spite of its deal to curb output between the beginning of 2017 and the end of first quarter next year in an effort to support oil prices.

Merrill Lynch form Bank of America said that the OECD total oil stockpiles are still higher than 3 billion barrels and the recouping of Nigerian and Libyan supplies should avoid steep stock, especially if it’s coupled with a rapid return of U.S. shale. Lynch added that the production is ready to rise again.

Looking on prices, U.S. West Texas Intermediate (WTI) crude futures edged up by 0.7 percent or 32 cents to settle at $45.45 a barrel and international benchmark for oil Brent crude futures was 0.7 percent higher as well or 34 cents to finish at $48.13 a barrel.

The gains of WTI and Brent mirrored a strong demand in fuel in the United States. The American Petroleum Institute (API) data showed last Wednesday that crude stockpiles in the country slipped more 5.8 million barrels in the week to 503.7 million barrels last June 30.

Trifecta’s director of energy consultancy Sukrit Vijayakar said that prices have managed to slightly recover some ground following the released figures from the API which suggested that crude stockpiles in the U.S. are falling.

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