Published: Fri, September 15, 2017
Markets | By Erika Turner

Oil hits $50 as it nears the August high. A few questions

Oil hits $50 as it nears the August high. A few questions

It comes after the International Energy Agency (IEA) said that the global demand and Opec production cuts were starting to reduce the global oil glut.

USA gasoline prices fell despite a record drawdown in fuel inventories. "The oil market enters a soft patch as the summer driving season wraps up and hurricanes Harvey and Irma more negatively impact demand than supply". They are also looking to ban the crude sales except for the existing pipeline supply that is hailing from China.

Early Wednesday, the U.S. Energy Information Administration said domestic crude supplies climbed ( by 5.9 million barrels for the week ended September 8.

Irma's hit in demand will partly offset the Gulf Coast's interrupted refinery runs, which are taking longer than expected to recover, according to the bank. It said the United States should strengthen its energy security to address hurricanes, by steps such as adding oil products to government-held inventories.

West Texas Intermediate for October delivery rose US$1.07 to settle at US$49.30 a barrel on the New York Mercantile Exchange.

Overall, there were solid gains later in the NY session with an initial move to the $49.0 p/b level. S. crude stockpiles rose almost twice expected levels last week as refineries cut output following Hurricane Harvey, while gasoline and distillate inventories drew, industry group the American Petroleum Institute said after the market settled.

Iran's own data point to larger cuts.

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Though inventories in developed economies are still 195 million barrels above the five-year average, it declined by 18.7 million barrels per day in July and will soon fall to this level given robust demand outlook and falling supplies.

If these weren't enough, the U.S. Energy Information Administration lowered its oil production forecast for this year and the next by 1% and 0.7%, respectively.

Global crude oil prices improved, as OPEC and non-OPEC countries continued to conform to voluntary output adjustments and U.S. stocks declined further, OPEC said.

Florida, which was hammered by Irma, is the No. 3 consumer of gasoline among US states, according to Energy Department figures; neighboring Georgia ranks seventh.

Members of the Organization of Petroleum Exporting Countries and other producers including Russian Federation have pledged to reduce crude output by about 1.8 million barrels a day through March to trim global oil inventories and buttress prices.

Crude oil inventories rose by 5.88 million barrels last week, the EIA said.

OPEC and non-member producers are seeking to extend their output cut agreement.

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