Crude Oil On Brink Of Cracking USD50

Javier Stokes
July 29, 2017

"There is an impression that we're coming into balance finally and it's driven by this pretty steep decline in USA crude oil inventories".

The West Texas Intermediate for September Delivery added 0.67 dollar to settle at 49.71 dollars a barrel on the New York Mercantile Exchange, while Brent crude for September delivery gained 1.03 dollar to close at 52.52 dollars a barrel on the London ICE Futures Exchange.

Short covering in the September contract contributed to the rally in the front-month spread, traders said.

USA crude and gasoline inventories fell much more steeply than expected this week and the world's biggest oil exporter Saudi Arabia said it would further reduce oil output in August.

USA crude stocks fell sharply last week as refineries increased output and imports declined, while gasoline stocks decreased and distillate inventories dropped, the Energy Information Administration said on Wednesday.

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Meanwhile, Norway's Statoil said on Thursday it expected a 5 percent increase in output this year amid higher oil prices, but the company reduced its planned exploration spending. This report details current and projected cargo flows - including Middle East exports to the USA - along with a host of trends, from OPEC to Venezuela to China.

Oil prices also crossed their 200-day moving averages, a key resistance level, meaning it will be harder to post further gains, said Matt Smith, director of commodity research at ClipperData.

But despite the move to the top of crude's recent trading range, Essner and other analysts expect prices to remain stuck between $42 and $55 a barrel.

Investors were eyeing an update on the USA rig count expected later on Friday to assess any signs of a slowing down in drilling activity.

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