The market is optimistic about OPEC's efforts to reduce the oil supply glut, and the cartel is widely expected to extend cuts later this month.. So, rising United States exports may undo OPEC's efforts to raise global oil prices.
December West Texas Intermediate crude rose 0.4 percent to reach $54.54 a barrel on the New York Mercantile Exchange, its highest settlement since 2015. Between these two dates, U.S. crude oil December futures rose 3.6%, and Brent crude oil January futures rose 4.8%.
Confidence has been fuelled by an effort this year lead by the Organisation of the Petroleum Exporting Countries and Russian Federation to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets. Oil prices have been rallying on expectations that the producers will extend the deal, which is set to expire in March, through the end of 2018. The trade has been fueled by a boom in USA oil output from shale fields, where producers use advanced drilling methods to coax fossil fuels from rock formations.
The United States exported 2.13 million barrels a day of crude oil in the week through October 27, the first time the country has crossed the 2 million-barrels-per-day mark.
Data on Wednesday showed that USA oil production grew by 46,000 barrels a day (bpd) to 9.55 million bpd, not far off the June 5, 2015 record high of 9.61 million, while weekly US crude oil exports rose to an all-time high of 2.13 million barrels per day.
The organization's report offers a "supportive inventory picture" with "fairly strong draws to both crude and product stocks", including distillates "holding noticeably below the five-year average", said Robbie Fraser, commodities analyst at Schneider Electric.
Acting as a partial offset, domestic U.S. oil output rose by another 46,000 barrel a day to 9.55m b/d.
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
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