Oil Prices Spike Amid Extremely Large API Crude Oil Draw (USO)

Saturday, 13 Jan, 2018

Brent crude futures were at US$69.10 a barrel, 10 cents below their last finish, albeit also still close to the previous day's peak of US$69.37 a barrel - the highest level since an intra-day spike in May 2015.

The West Texas Intermediate (WTI) was trading up 2.33 percent at 63.17 US dollars Tuesday afternoon.

WTI light sweet crude oil rose 60 cents to USD63.64 a barrel this morning, the highest in more than three years.

World oil prices rise on Wednesday morning after the publication of the data of the American Petroleum Institute (API) on the reserves of "black gold" in the US, gaining a foothold on the record levels achieved the day before. "OPEC is edging ever closer to its desired target of reducing OECD industrial stocks to the five-year average".

More immediate price support came overnight from the United States, where crude inventories fell nearly 5 million barrels in the week to Jan 5, to 419.5 million barrels.

The department's Energy Information Administration forecast Tuesday that USA oil production will average 10.8 million barrels a day in 2019, a level that would put it on par with and. However, U.S. production dropped sharply, though those figures are not considered as reliable as monthly data, which is released with a lag. Export price index is expected to be 0.3%, down from 0.5% a month ago.

Still, downward pressure emerged in the physical market, where OPEC's second and third-largest producers, Iran and Iraq, this week cut their prices to remain competitive.

In Asia's Singapore oil trading hub, average refinery profit margins have fallen below $6 a barrel, their lowest seasonal level in five years.

Last week, the API reported a large draw of 4.992 million barrels of crude oil, along with an increase in gasoline inventories of 1.87 million barrels.

"Markets are getting a bit tired and a healthy correction could be on the cards", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore.