Crude oil rises after ninth weekly stock drawdown in US

Falling production would likely reduce revenue and cash flow absent an increase in crude oil prices.

US West Texas Intermediate crude for September delivery, the new front month contract from Thursday, was up 2 cents at $45.77 a barrel at 0102 GMT.

Crude oil prices rose on Wednesday after the Energy Information Administration reported crude oil inventories decreased for the ninth consecutive week. The American Petroleum Institute has published a report showing that US crude supplies decreased by 2.3 million barrels.

Adding to the sense of oversupply for oil products, China’s June gasoline output rose 8.7 per cent from a year ago to 11 million tonnes, or about 3.1 million barrels per day, the Statistics Bureau said today.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories fell by 2.3 million barrels in the week ending July 15. Gasoline stocks are also well above the upper limit of the average range, according to the EIA.

Brent for September settlement gained 26 cents to $47.43 a barrel on the London-based ICE Futures Europe exchange.

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The inability for gasoline inventories to shed surplus barrels sitting in storage has been a source of weakness across the oil complex this summer. “On the bearish side, gasoline stocks rose”.

“In the light of the latest statistics on US oil inventories the market fared really well”, Tamas Varga, an analyst at PVM Oil Associates Ltd., said in a report.

Analysts surveyed by S&P Global Platts had expected crude stocks to have declined 1.25 million barrels.

Although the crude oil price decline since 2014 has led to significant reductions in operating cash flow for USA oil companies, their immediate financial situations are improving. In fact, US stockpiles have felt by the fantastic 1.7 million barrels just las week, according to many analysts who were surveyed by the famous Wall Street Journal.

Crude oil inventories typically decline in July as refiners increase their runs during periods of heightened gasoline demand.

“Should we return towards the lows reached earlier in January-February, this could revive long-only interest in oil given the prevailing consensus of much higher oil prices by 2018-2019”, said Harry Tchilinguirian, head of commodity strategy at BNP Paribas.