Oil up ahead of US inventory data

US commercial crude inventories decreased by 1.8 million barrels last week, maintaining a total USA commercial crude inventory of 520.8 million barrels.

USA crude stockpiles likely rose by 882,000 barrels in the week ended May 12, according to industry group American Petroleum Institute. Oilgram Price Report also brings a vast array of Platts worldwide prices for crude and products, netback tables, and market critical data. Rig counts have recently ticked higher and with credit and earnings issues improving for some US shale drillers, those companies may seize the opportunity to exploit higher pricing in the near-term. WTI was trading down 0.18% at 2:14pm EST at $48.76 (+$2.89 over last week) and Brent Crude was trading down 0.08% at $51.78 (+$3.09 over last week).

The news sent oil prices soaring about two percent on Monday, and a further 0.7 percent on Tuesday, helping energy groups strengthen global stock markets. OPEC leaders to meet in Vienna on 25th May to discuss the possible extension of the November deal.

This move would also increase supply in the markets.

Even as inventories are drawing down, US crude production has climbed 10 percent since mid-2016 to 9.3 million barrels per day, close to levels from top producers Russian Federation and Saudi Arabia. Data from the Energy Information Agency, seen as more complete, is due at 1430 GMT (10.30 a.m ET) on Wednesday.

United States shale producers have kept oil prices below Saudi Arabia’s target of $60 a barrel, with supplies coming back online at faster rates than expected. However, in its monthly Oil Market Report, the agency said that the oil market was “almost balanced” in the first quarter of this year, which led to a drop in OECD commercial stocks for the second consecutive month in March.

“As we have seen over the past six months, rising USA production and record inventories have kept upside limited and a nine month extension at this stage is unlikely to break that”.

Production restrictions from the Organization of Petroleum Exporting Countries (OPEC) dictate that the country should limit its production to 4.351 million barrels per day, but exports for bloc members remain unbound.

On a per capita basis, OPEC net oil export earnings are expected to increase by about 18 per cent from $912 billion in 2016 to $1.112 trillion in 2017.