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Oil ends lower as April contracts expire ahead of U.S. crude-supply data

MARKET WATCH

Trades look for hints on potential for OPEC output cut extension

Shutterstock/zhengzaishuru

By

MyraP. Saefong

Markets/commodities reporter

RachelKoning Beals

News editor

Oil prices settled lower Tuesday in volatile trading tied to the expiration of the April futures contracts, ahead of data expected to reveal a rise in weekly U.S. crude supplies.

Traders also kept an eye out for hints on whether the Organization of the Petroleum Exporting Countries will extend the production-cut agreement between its members and other major producers beyond June. OPEC sources have indicated that members increasingly favor an extension but want the backing of non-OPEC oil producers, which have yet to deliver fully on existing cuts.

April West Texas Intermediate crude CLJ7, -1.49% declined by 88 cents, or 1.8%, to settle at $47.34 a barrel on the New York Mercantile Exchange. The contract, which expired at the settlement, finish at their lowest level since November, according to FactSet data. May WTI CLK7, -0.58% which is now the front-month contract, shed 67 cents, or 1.4%, to finish at $48.24 a barrel.

May Brent crude LCOK7, -0.51% lost 66 cents, or 1.3%, to $50.96 a barrel on the ICE Futures exchange in London.

“WTI crude oil was unable to hold on to early gains despite a falling U.S. dollar providing support to commodity prices in general,” Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch.

“Given the high volatility and big surprises in both directions of the last three weeks, it appears some traders may be going to the sidelines ahead of the [supply data] news, while others may be expecting a big build after last week’s surprise decline,” he said.

Petroleum inventory data are due out from the American Petroleum Institute late Tuesday and Energy Information Administration early Wednesday. Analysts surveyed by S&P Global Platts forecast a climb of 2 million barrels in crude inventories for the week ended March 17.

“A lot of the recent volatility in oil has been around traders trying to figure out if the big build we saw in U.S. inventories in the winter is over or not,” said Cieszynski. EIA data released last week showed the first decline in crude stockpiles in 10 weeks.

The world’s biggest crude exporter is conceding ground to shale producers in the U.S., people familiar with current Saudi policy said. Saudi Arabia’s crude exports to the U.S. for the week ended March 10 fell by 426,000 barrels a day compared with the previous week, according to U.S. data.

Elsewhere in energy trading, April gasoline RBJ7, -0.28%  fell by 0.4% to $1.605 a gallon, while April heating oil HOJ7, -0.39%  lost 0.7% to $1.503 a gallon.

April natural gas NGJ17, -0.32%  settled at $3.093 per million British thermal units, up 1.7%.

US crude oil up 2.4%

US crude settles at $48.86, up 2.4% on stockpile drop, snapping 7-session losing streak

Futures Now: Crude oil breaks losing streak

Futures Now: Crude oil breaks losing streak   

Oil prices rose more than 2 percent Wednesday, lifted by a surprise drawdown in U.S. crude inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts should create a crude deficit in the first half of 2017.

Data from the U.S. Energy Information Administration (EIA) showed U.S. crude stocks fell last week, dropping after nine consecutive increases.

Inventories fell by 237,000 barrels in the week to March 10, compared with analysts’ expectations for an increase of 3.7 million barrels.

The IEA said global inventories rose in January for the first time in six months despite OPEC output cuts, but said if it stuck to its production curbs the market should see a deficit of 500,000 barrels per day (bpd) in the first half.

“For those looking for a rebalancing of the oil market the message is that they should be patient, and hold their nerve,” the IEA said in its monthly report.

Futures Now: Crude oil breaks losing streak

Futures Now: Crude oil breaks losing streak   

U.S. West Texas Intermediate crude ended Wednesday’s trade up $1.14, or 2.4 percent, at $48.86, snapping a seven-session losing streak.

Brent futures were up 83 cents, or 1.6 percent, at $51.75 a barrel by 2:39 p.m. ET (1839 GMT). Prices had hit a three-month low of $50.25 during the previous day’s trading.

Prices extended gains after the U.S. Federal Reserve raised interest rates in a widely anticipated move that sent the dollar index lower. A weaker greenback makes dollar-denominated crude oil more affordable to holders of other currencies.

EIA also reported gasoline stocks fell by 3.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 2 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, were down 4.2 million barrels, versus expectations for a 1.7 million-barrel drop.

Earlier, the IEA reported global inventories rising in January for the first time in six months despite OPEC cuts since Jan. 1, but said if OPEC stuck to limits the market should see a deficit of 500,000 barrels per day (bpd) in the first half of 2017.

“As long as OPEC stays on track and non-OPEC delivers on their agreed cuts, the market will continue to balance,” said Ole Hansen, head of commodity strategy at Saxo Bank.

The Organization of the Petroleum Exporting Countries said at the end of November it would cut 1.2 million bpd during the first half of 2017, and then in December reached a deal with non-OPEC producers to cut about 600,000 bpd from their output.

Matt Smith: US inventory at record highs

Matt Smith: US oil inventories at record highs   

Despite OPEC compliance with its share of the cuts, stockpiles have continued to rise, in part because OPEC members pumped heavily before cuts kicked in and also because U.S. shale producers have raised output as Brent spiked above $58 in January.

Last week, prices plummeted more than 5 percent, the biggest drop in a year, as U.S. crude inventories surged much more than expected to a record high.

“While such patience (counseled by the IEA) may indeed benefit longer-term investors it may not be much help for money managers facing year-to-date losses on long positions, whether longer-term holdings benchmarked to the December 30 Brent closing price of $56.82 or purchased over the long period of range trading over the first ten weeks of the year,” Tim Evans, Citi Futures’ energy futures specialist, said in a note.

“Surplus inventories and rising U.S. production may be more of a worry to them.”

On Tuesday, prices had been hit hard by an OPEC report showing a rise in global crude stocks and a surprise output jump from OPEC’s biggest member, Saudi Arabia.

Secondary sources had said Saudi output fell in February to 9.797 million barrels per day (bpd), but Riyadh told OPEC it rose to 10.011 million bpd.

Saudi Arabia played down the figures, saying its supplies to the markers were effectively stable during January and February.

— CNBC’s Tom DiChristopher contributed to this report.

Oil Bulls Blink After Months of Attempts to Boost Crude Prices


FILE - An oil storage tank and crude oil pipeline equipment is seen at the Strategic Petroleum Reserve in Freeport, Texas, U.S., June 9, 2016.

FILE – An oil storage tank and crude oil pipeline equipment is seen at the Strategic Petroleum Reserve in Freeport, Texas, U.S., June 9, 2016.

Oil bulls trying to push the crude market higher finally waved the white flag Wednesday, triggering the biggest rout in a year on concerns that stubbornly high inventory levels would persist despite supply cuts.

Prices had been locked in the tightest trading range in over a decade as traders and speculators piled into bets that oil prices would rise after the world’s top producers cut output.

For weeks, they shrugged off record high inventories in the United States until Wednesday, when the market finally blinked.

Global oil benchmark, Brent and U.S. crude’s West Texas Intermediate prices plunged more than 5 percent — the biggest drop since February 2016 — an unwelcome reminder of the darkest days of a two-year price war that left many U.S. shale producers with beleaguered balance sheets.

The move also lifted trading volumes to the highest since early December, with over 430,000 contracts in Brent crude for May delivery and more than 911,000 contracts of WTI for delivery in April changing hands.

The selloff continued Thursday, as U.S. crude hit a low of $48.79 a barrel in early trading, its first drop below $50 all year, while Brent crude touched a low of $51.60 a barrel, its lowest since Dec. 1.

Industry players were divided on whether the price slide would continue or be short lived, given producers’ adherence to a pledge to rein in output and prop up prices that have languished for over two years owing to a glut.

“The high level of uncertainty that has kept the oil complex trading in a relatively narrow trading range since late last year has been replaced, at least for the moment, by a bearish market sentiment,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

“The discussion will now center around whether or not Saudi Arabia is willing to give back market share to U.S. producers … or are they ready for yet another round of the market share war.”

So far, there has been no indication that Saudi and OPEC would extend the cuts beyond what is announced or allow the U.S. to claw some of its market share.

Suhail bin Mohammed al-Mazrouei, energy minister for the United Arab Emirates, told Reuters on the sidelines of an industry conference in Houston that the plunge in oil prices was temporary and prices would rise as OPEC complies with output cuts.

Still, the rise in inventories was “a worry,” he admitted.

Despite record exports in U.S. crude oil, inventories have ballooned to a new high week after week, threatening a speedy rebalancing of the market.

Saudi Oil Minister Khalid al-Falih even admitted on Tuesday inventory drawdowns were taking longer than he had expected for the first two months of the year.

The crash Wednesday also tested key technical levels of support established this year and dropped below their 100-day moving averages — a key metric for chart watchers — for the first time since the OPEC deal was announced.

“The move down is in oversold territory, but otherwise, there is very little evidence that it will end,” Dean Rogers, senior analyst at Kase & Company, said of WTI.

A small upward correction might take place first, but odds strongly favor a continued decline toward the next major target at $48, he said, adding that for Brent, the move lower is poised to continue to at least $52.60 and likely $51.60 and lower over the next few days.

Still, for the long term, most market participants continue to remain bullish.

Trade in options — that give the holder the right to buy or sell at a specific price — signaled that the market does not expect prices to move much lower than current levels.

“Their [OPEC’s] response may very well be a continuation of cooperation to limit their oil production, perhaps for a little longer than they had hoped and this should help keep a floor under oil prices,” said Fawad Razaqzada, technical analyst at forex.com.

“Indeed, despite today’s sharp selloff, I remain bullish on oil and still expect to see $60-$70 a barrel by the year end.”

US oil price plunges toward $50

Market alert: US oil price plunges toward $50 as a perfect storm brews

Workers connect drill bits and drill collars, used to extract natural petroleum, on Endeavor Energy Resources' Big Dog Drilling Rig 22 in the Permian basin outside of Midland, Texas.

Futures Now: Crude oil hits 1-month low   

Oil is on track to break through the key psychological level of $50 a barrel after a ninth straight rise in U.S. crude stockpiles came at exactly the wrong moment, analysts said Wednesday.

The amount of crude oil in U.S. storage rose to another record high on Wednesday, jumping 8.2 million barrels from the previous week, the Energy Information Administration reported. The increase was more than four times what analysts expected.

Weekly figures also showed U.S. oil production continuing to tick up toward 9.1 million barrels a day, the highest level in more than a year. That provided further evidence that rising American output is confounding efforts by the Organization of the Petroleum Exporting Countries, Russia and 10 other exporters to reduce global oil inventories by curbing their own output.

“It’s really been like a kettle boiling for the last few weeks in terms of having traded in a very tight range. There’s been this pressure building from a technical perspective.” -Matt Smith, director of commodity research, ClipperData

The data sent U.S. benchmark West Texas Intermediate crude prices plunging more than 5 percent to a nearly three-month low.

The plunge through a number of lows on Wednesday puts oil on a path to test the December low of $49.95 a barrel, said John Kilduff, founding partner at energy hedge fund Again Capital.

“From there you could accelerate,” he told CNBC, adding that $50 “was the fail-safe.” Kilduff’s downside target, once oil breaks below $50 a barrel, is $42.

For the last three months, oil has traded in a range between $49.61 and $55.24.

According to Kilduff, all the elements are in place for oil to break below its three-month range: lack of cohesion among OPEC members, bearish statements from oil ministers at CERAWeek conference by IHS Markit and subdued refinery activity as operators perform seasonal maintenance in the United States.

Bearish OPEC comments at CERAWeek

On Tuesday, Saudi Oil Minister Khalid al-Falih warned at CERAWeek that the kingdom would only support OPEC’s intervention in markets for a “restricted period of time” and would not “underwrite the investments of others at our own expense and long-term interests.”

Later that evening, oil ministers convened a last-minute press briefing, where they reaffirmed their commitment to the production cut deal.

“The Saudis almost explicitly warned that if we don’t get cooperation or we see cheating we’re not going to be someone’s patsy forever,” said Tom Kloza, global head of energy analysis at Oil Price Information Service.

Saudi Arabia has so far provided the lion’s share of output cuts as OPEC and other producers seek to remove 1.8 million barrels from the market in the first six months of 2016. Iraq, OPEC’s second largest producer, produced above its quota in January.

Saudi energy minister: We have been bearing a significant part of the load of OPEC cut

Saudi energy minister: We have been bearing a significant part of the load of OPEC cut   

Also at CERAWeek on Tuesday, Iraqi Minister of Oil Jabbar Ali Al-Luiebi said Baghdad could increase its output capacity to 5 million barrels a day by the second half of 2017, raising concerns about its commitments to production cuts.

Andy Lipow, president of Lipow Oil Associates, said $50 can now be considered a target. If oil prices break that level, market watchers can expect more talk from oil ministers about extending the OPEC agreement another six months when producers meet in May, he added.

“I think that OPEC is hoping they can wait it out so they don’t have to make a decision in May to continue with production cuts, but they may be forced into that decision given the high inventories here in the U.S.,” he said.

Those inventory builds are likely to continue through the refinery maintenance season, according to Lipow.

Kettle finally boils over

Further fueling the fall to $50 a barrel is the record number of bets traders have recently made on crude rising further, said Matt Smith, director of commodity research at shipment tracking firm ClipperData. As oil prices fall to the bottom of their range, more traders will look to unwind those positions, he explained.

“It’s really been like a kettle boiling for the last few weeks in terms of having traded in a very tight range. There’s been this pressure building form a technical perspective,” he said. “As that happens, as that pressure builds, we tend to pop violently.”

OPEC Secretary General Mohammed Barkindo (R)

OPEC secretary general on production cuts   

Kloza also sees the anniversary of crude oil storage leases playing into the problem.

Many traders took out one-year leases around this time in 2016, when crude prices were near the lows of the downturn, he explained. Now that the oil price curve is flattening — meaning prices for future crude deliveries are declining relative to current costs — traders have little incentive to sign another one-year lease. Instead they’re selling that oil into an oversupplied market.

While the next 30 days provide an environment ripe for a drop below $50 a barrel, Kloza said, he doesn’t see an “apocalyptic move lower.”

“We may break below that range for about 90 days, but in the end I think we’ll be above it come driving season,” he said. “From now through let’s say May, it may be stormy times,” he said.

Op-Ed: US crude oil testing resistance

An oil pump jack in the oil town of Gonzales, Texas.
Getty Images
An oil pump jack in the oil town of Gonzales, Texas.

U.S. crude oil seems to be going nowhere but the weekly New York mercantile Exchange l chart for West Texas Intermediate tells a different story. The chart shows consistent bullish behaviour even though price has developed a temporary resistance level near $54. The sideways movement that has been in place since 2017 January has lulled some observers into a false sense of security when it comes to the potential for further increases in the oil price.

The weekly NYMEX Oil chart shows a long term inverted head and shoulder reversal pattern. This trend reversal pattern is reliable and has a high probability of reaching the projected price breakout targets.

This is a long-term trend reversal pattern that started in mid-2015 and which was confirmed towards the end of 2016. It is best seen on the weekly price chart.

The head and shoulders are shown with the curved lines. The sustained sideways move above $50 in the current uptrend confirms the inverted head and shoulder pattern and the continuation of the slow uptrend.

The depth of the head and shoulder pattern between the neckline and the head is measured and the value projected upwards. This gives a long term upside target near $68. This target is verified using the second chart feature that sets the character of the NYMEX oil chart.

The second feature is the historical pattern of support and resistance levels. The rebound from support near $48 is part of this pattern behavior. Resistance is near $58. A breakout above this level gives a medium term target near $68.

The historical resistance level near $58 is the most significant resistance level for any trend change. The level was broken in 2015 June but the breakout was overwhelmed by the wide separation in the long term Guppy Multiple Moving Average. This is not the situation today. Now the long term GMMA is acting as a support level and the move towards $58 is slow and steady.

The long term GMMA provides an indication of the way investors are thinking. The steady separation of the long term group of averages shows confident support for the new uptrend.

The short term group of averages provides an indication of the way traders are thinking. The consistent steady separation confirms strong confidence in the trend strength. Any pullback in price is taken as a buying opportunity. This is shown by the lack of compression in the short term GMMA when prices pull back.

The successful breakout above $48 is moving slowly to the historical resistance level near $58. This offers short term trading opportunities which can be exploited using the ANTSSYS method to trade the consolidation behavior. The breakout above $58 has a resistance target near $68 and this helps validate the head and shoulder price projection target.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found at www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.

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Oil prices extended losses on Tuesday

Oil prices slide after API reports 14.2 million barrel US crude stockpile increase; gasoline stocks also rise

Crude plunges off strong dollar 

Oil prices extended losses on Tuesday after an industry group reported a far larger rise in weekly U.S. crude stockpiles than anticipated.

U.S. crude oil in storage rose by 14.2 million barrels last week, according to the American Petroleum Institute. That was more than five times analysts’ forecasts for a 2.5-million barrel increase.

Gasoline stocks rose by 2.9 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.1-million barrel gain.

U.S. crude was trading at $51.72 after ending Tuesday’s trade down 84 cents, or 1.6 percent, at $52.17.

Benchmark Brent crude was down $1.03, or 1.9 percent, to $54.69 a barrel by 4:50 p.m. (2150 GMT).

Concerns that U.S. gasoline consumption is stalling weighed on futures. U.S. gasoline prices fell 2.3 percent.

Commodities tomorrow:

Commodities tomorrow: Strong support for oil at $53   

Futures were pressured on Tuesday by sluggish demand and evidence of a burgeoning revival in U.S. shale production that could complicate efforts by OPEC and other producers to reduce a supply glut.

Gasoline stockpiles rose by almost 21 million barrels in the first 27 days of 2017, compared with an average increase of less than 12 million barrels at the same time of year during the previous decade, according to official inventory data.

“It’s a supply-driven setback … We are within 2 million barrels of the record in U.S. gasoline stocks that we saw last February,” said Tony Headrick, energy markets analyst at CHS Hedging. “A strong build in inventory reports could weigh on gasoline in a seasonal timeframe where gasoline demand is weak.”

Inventory estimates from trade group the American Petroleum Institute are due on Tuesday afternoon. U.S. government data is reported Wednesday.

Gasoline futures fell below the 200 day moving average on a continuous chart, Headrick noted.

The U.S. dollar rose 0.4 percent against a basket of currencies, making dollar-denominated commodities like crude oil more expensive to holders of other currencies.

Prices have been supported for two months as the Organization of the Petroleum Exporting Countries and other exporters have tried to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017. OPEC and Russia have together cut at least 1.1 million bpd so far.

Another bullish sign emerged on Tuesday as crude oil exports from southern Iraq fell in January to 3.275 million barrels per day (bpd) from 3.51 million bpd in December, according to two oil executives.

Iraq, OPEC’s second largest producer, has been a concern among analysts because it has a harder time managing output than some other cartel members. Its leaders also raised issues with the coordinated production cuts from their inception.

‘Encouraging’ signs that OPEC production has been cut back: IEA

‘Encouraging’ signs OPEC production has been cut back: IEA   

But market players are concerned that rising U.S. production and signs of slowing demand growth could offset these efforts.

“The general perception is that OPEC is cutting production, which is supporting prices, but high stock levels, rising rig counts and growing U.S. production are capping gains,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.

Societe Generale oil analyst Michael Wittner said U.S. shale oil output was recovering faster than expected.

“Rig counts are increasing at an accelerating pace, and given the technological advances of the past three years, this should translate into significant supply,” Wittner said.

“U.S. shale is coming back, and it’s coming back strong.”

U.S. oil production is expected to rise 100,000 barrels per day to 8.98 million barrels in 2017, 0.3 percent less than previously forecast, according to a monthly U.S. government report released on Tuesday.

Chinese oil demand grew in 2016 at the slowest pace in at least three years, Reuters calculations showed, the latest sign of slower demand from the world’s largest energy consumer.

Correction: This story has been corrected to reflect the total stockpile build reported by API was 14.2 million barrels.

— CNBC’s Tom DiChristopher contributed to this report.

US Crude settles at $52.75

CNBC

US crude settles at $52.75, down 43 cents, after EIA reports bearish oil, fuel stockpile data

Build in crude oil inventories

Build in crude oil inventories   

Oil prices fell on Wednesday after earlier shrugging off a report from the U.S. Energy Information Administration that showed the nation’s crude inventories rose and gasoline stocks increased sharply.

U.S. light crude settled down 43 cents at $52.75. Benchmark Brent crude fell 25 cents a barrel to $55.19 by 2:54 p.m. ET (1954 GMT).

Futures fell early in the day after builds in U.S. inventories reinforced expectations that increasing shale output this year would reduce the impact of production cuts by OPEC and other major exporters. However, they turned positive after the EIA report amid market strength.

Again Capital founding partner John Kilduff said there was little to cheer in the report, but oil futures can’t fight the strength on Wall Street on a day when the Dow crossed 20,000 for the first time ever and markets were broadly higher.

“It was a very bearish report, and it’s a cloud over this market, but it’s no asset class left behind at the moment,” Kilduff said.

Trump revives pipelines: Who wins & loses?

Trump revives pipelines: Who wins & loses?   

U.S. crude stockpiles rose by 2.8 million barrels in the week through Jan. 20, matching analysts expectations and roughly in line with an earlier report from the American Petroleum Institute.

U.S. gasoline futures fell to a session low after EIA reported gasoline stocks rose by 6.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 498,000-barrel gain. It pared losses shortly after the report came out.

Distillate stockpiles, which include diesel and heating oil, increased by 76,000 barrels, versus expectations for a 1 million-barrel drop, the EIA data showed.

Oil prices have found support in recent weeks from plans by the Organization of the Petroleum Exporting Countries and other producers to reduce output.

Around 1.5 million barrels per day (bpd) has already been taken out of the market from about 1.8 million bpd agreed by oil majors starting on Jan. 1, energy ministers said on Sunday, as producers look to reduce oversupply.

Bernstein Energy said global oil inventories declined by 24 million barrels to 5.7 billion barrels in the fourth quarter of last year from the previous quarter. The amount remaining equates to about 60 days of world oil consumption.

Bearish on oil for the short term: Pro

Bearish on oil for the short term: Pro   

But as OPEC is cutting, U.S. shale output is rising.

U.S. oil production has increased by more than 6 percent since mid-2016, although it remains 7 percent below its 2015 peak. Output is back to levels reached in late 2014, when strong U.S. crude output contributed to a crash in oil prices.

President Donald Trump‘s promise to support the U.S. oil industry has encouraged analysts to revise up their forecasts of growth in U.S. oil production, which is already benefiting from higher prices.

A push by Republicans in the U.S. House of Representatives for a shift to border-adjusted corporate tax could help push U.S. crude prices higher than global benchmark Brent, triggering large-scale domestic production, according to Goldman Sachs.

— CNBC’s Tom DiChristopher contributed to this report.

New Washington Reports Shows No Crude Oil by Rail in Grays Harbor

KBKW

A new report from the Washington State shows no crude oil traveled by railroad to Grays Harbor County in the 4th quarter of 2016. The Department of Ecology was tasked with releasing the “Crude Oil Movement by Rail and Pipeline Quarterly Report” by code adopted last summer (Chapter 173-185 WAC) which established reporting standards for facilities that receive crude oil by rail and pipelines that transport crude oil in or through the state. Additionally, the rule identified reporting standards for Ecology to share information with emergency responders, local governments, tribes, and the public.

This quarterly report for the reporting period October 1, 2016, to December 31, 2016, provides aggregated information on crude oil transported by rail to facilities in Washington, information on crude oil movement by pipeline, and information on crude oil spilled during transport and delivery for rail and pipeline.

In addition, information is provided about the volume of crude oil transported into the state by vessel, and eventually by pipeline. Although the report said that pipeline data was delayed and will be added later this month.

View the entire report here: https://fortress.wa.gov/ecy/publications/documents/1708002.pdf

A summary of the data shows:

  • Two regions of origin are reported: Alberta and North Dakota.
  • Three types of crude oil are reported: heavy, medium, and light.
  • The total volume of crude oil transported by rail during the quarter was 14,708,705 barrels (617,765,610 gallons).
  • The average weekly volume of crude oil transported by rail was 1,050,622 barrels (44,126,124 gallons).
  • The total number of rail cars moving crude oil by rail was 21,603 cars.
  • The average number of rail cars per week moving crude oil by rail was 1543 cars.
  • 1% of crude oil transported by rail was heavy crude, 5% was medium crude, and 94% was light crude.
  • Alberta was the region of origin for 6% of crude oil transported by rail, while North Dakota was the region of origin for 94% of crude oil transported by rail.

US Crude up 29 cents

CNBC

US crude settles at $51.37, up 29 cents as IEA sees oil market tightening

Jonathan Alcorn | Reuters
Oil jack pumps are pictured in the Kern River oil field in Bakersfield, Calif.

Oil prices edged higher on Thursday, but swelling U.S. crude stockpiles limited the rebound from a one-week low after the International Energy Agency said oil markets had been tightening even before cuts agreed by OPEC and other producers took effect.

The IEA said that while it was “far too soon” to gauge OPEC members’ compliance with promised cuts, commercial oil inventories in the developed world fell for a fourth consecutive month in November, with another decline projected for December.

U.S. West Texas Intermediate crude oil settled up 29 cents at $51.37 per barrel, having dropped to a one-week low on Wednesday at $50.91 a barrel.

International benchmark Brent crude was up 34 cents at $54.26 a barrel by 2:33 p.m. ET (1933 GMT), after closing down 2.8 percent in the previous session.

A strong U.S. dollar limited oil’s advance.

RBC strategist: Oil will grind higher

RBC strategist: Oil will grind higher   

Prices tumbled to session lows after U.S. Energy Information Administration (EIA) data showed crude inventories rose unexpectedly last week as refineries sharply cut production.

U.S. commercial crude inventories rose by 2.3 million barrels in the week through Jan. 13 to 485.5 million barrels, well above the expectations of a 342,000-barrel decline.

The data also showed much larger-than-expected increases in stocks of gasoline and a surprise drop distillates inventories. Stockpiles of gasoline in the U.S. East Coast swelled to the highest weekly levels on record for this time of year, when refiners typically begin storing barrels ahead of summer driving season.

“At the end of the day, the focus is on the bigger picture and the bigger picture still looks positive which is why we are still up,” said Scott Shelton, energy specialist at ICAP in Durham, North Carolina.

“The bigger picture includes the OPEC/non-OPEC supply cuts and the IEA report, which was pretty supportive.”

Oil prices have gyrated this year as the market’s focus has swung from hopes that oversupply may be curbed by output cuts announced by the Organization of the Petroleum Exporting Countries and other producers to fears that a rebound in U.S. shale production could swamp any such reductions.

The head of the IEA, Fatih Birol, said in Davos, Switzerland, that he expected U.S. shale oil output to rebound by as much as 500,000 barrels per day over the course of 2017, which would be a new record.Oil and Gas

Futures Now: Oil slips on supply concerns

Futures Now: Oil slips on supply concerns   

It raised its 2016 demand growth estimate, and said the data indicated that rising demand was slowly tightening global oil markets.

Still, analysts warned that keeping the cuts was crucial, particularly as a resilient U.S. shale industry threatened to add more barrels to the market.

“Discipline and strict adherence to the new quotas will be needed probably throughout 2017 and beyond to see the long-awaited and sustainable rebalancing finally arrive,” PVM Oil Associates analyst Tamas Varga said in a note.

OPEC, which is cutting oil output alongside independent producer Russia for the first time in years, wants a lasting partnership with Moscow, Saudi Energy Minister Khalid al Falih told Reuters. He also said extending the deal for a full year if the market rebalances was not needed.

OPEC itself said its cuts would help balance the market, and said its output had already fallen in December. But it also pointed to the possibility of a rebound in U.S. output amid higher oil prices.

Crude Oil Prices under Pressure amid Increasing Production

Alexander Gorodezky

Economic Calendar

After generating positive results last week amid traders’ optimism over the production cut from major producers, including Saudi Arabia and Kuwait, crude oil prices came back under pressure in Monday’s trade, thanks to the threat of increasing Iran’s exports and rising U.S. supplies. Iran started increasing its exports over the last couple of months from oil held in tankers at sea.

Iran sold almost 13 million barrels of crude oil held in tankers at sea, indicating a smart move of enhancing its market share, when fellow producers are slashing their supplies. While Iran’s biggest rivals, including Saudi Arabia and Kuwait, announced production cuts of 485,000 and 131,000 barrels per day respectively for the first quarter this year.

Iran’s strategy of selling oil held at sea could have negative repercussion over the production cut agreements between 24 countries. Brent crude oil prices were trading almost 13 cents lower in Asian trade on Monday from the recent settlement, while U.S. West Texas Intermediate oil prices were trading 20 cents lower from earlier close.

The threat of rising of U.S. production is also weighing on crude oil prices, as traders are realizing that North American producers are making a stronger than expected comeback.

U.S. oil rig counts have increased since summer of the last year. Last week, Baker Hughes reported a 10th straight week of growth in U.S. oil rig counts to the highest level in the last 13 months. U.S. oil production increased mostly at a mid-single digit rate in the last six months, thanks to improving prices and declining break-even points.

U.S. producers have slashed their break-even levels to below $50 a barrel, settling strong footholds to expand volumes at current oil prices. Therefore, U.S. producers are ready to make a strong rebound in the coming days, which could stun the market participants. Several U.S. producers have announced increased spending plans for FY2017 after significant cuts in the last three years.