Oil gains 1 percent as US inventories drop for fourth week

29 May 2015 | Author: | No comments yet »

Libya Seconds OPEC Output Target as Ministers Head to Vienna.

Singapore: Crude futures rose around 1% on Friday after American inventories fell for a fourth straight week although prices are set for a weekly drop on a stronger dollar. On the New York Mercantile Exchange, light, sweet crude futures for delivery in July CLN5, +1.14% traded at $58.39 a barrel, up $0.71 in the Globex electronic session.OPEC will maintain its production target next week, Libya’s deputy vice prime minister said, joining Kuwait in predicting no policy change when oil ministers from the 12-member group meet in Vienna. Oil saw steep falls earlier this week as a resurgent dollar weighed on the market amid concerns US crude supplies may have started rising again after three weeks of draws. OPEC is working on a long-term strategy draft to present next week that is likely to show projections of crude supply from non-OPEC producers are the same as those forecast in 2014, he said. “The target number will not change,” Oun said.

Data from the US Energy Information Administration (EIA) showed on Thursday that crude oil inventories fell by 2.8 million barrels last week, down for the fourth week ahead of Monday’s Memorial Day holiday, which unofficially kicked off the peak summer driving season in the US. However, U.S. crude production jumped to 9.57 million barrels a day, breaking out of the production plateau it has been coasting on since March, partly due to new oil fields ramping up in the Gulf of Mexico, Societe Generale said in a report. “With OPEC’s June 5 meeting right around the corner and no chance of a policy change, we will continue to focus on U.S. production and production costs,” the bank said. The Organization of Petroleum Exporting Countries will be meeting to decide on the group’s production target for the next six months amid a glut that sent prices down about 50 percent last year. Most market participants are factoring in no change to OPEC’s production ceiling of 30 million barrels of oil a day and its recent stance of not adjusting output levels to support prices. “With [oil] prices forecasted to average higher in coming years and OPEC production costs amongst the lowest in the industry, we expect OPEC will allow prices to ‘correct’ the market while safeguarding as much of their export revenues as possible,” analysts at BMI Research, a unit of Fitch, said. Saudi Arabia, the group’s biggest exporter, led OPEC’s decision in November to maintain its output target to defend market share amid booming U.S. shale supplies.

The research firm is bullish on Chinese oil demand and said strategic stock-building and rising consumption from small-capacity teapot refiners will buoy China’s crude imports in the second half of this year and in 2016. Meanwhile, investors are tracking debt negotiations in Greece, preliminary U.S. first-quarter gross domestic product data and U.S. drilling rig-count numbers due later Friday for more cues.

Nymex reformulated gasoline blendstock for June RBN5, +0.78% — the benchmark gasoline contract — rose 164 points to $2.0015 a gallon, while June diesel traded at $1.8856, 152 points higher.

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