Oil rally pauses on signs US crude tanks start to fill again

Oil’s advance slowed after prices hit a new three-year high amid signs that US crude stockpiles increased last week.

Futures were little changed in New York after closing on the 23^rd January at the highest level since December 2014. Industry data signalled inventories rose by 4.76 MMbbl last week, which will be the first gain in ten weeks if confirmed by a government report on the 24^th January. The EIA is forecast to show supplies slid by 2 MMbbl.

Oil has extended a two-year gain as OPEC and its allies trim output to reduce a global glut.

While rising US production is seen as a challenge to those supply cuts, Qatar’s Energy Minister Mohammed Al Sada said the market can absorb shale growth and will re-balance in the second half of 2018. The International Monetary Fund said the global economy this year will expand at the fastest pace since 2011.

“Let’s see if markets are able to push above US65 after today’s inventory data,” said Hans van Cleef, senior energy economist at ABN Amro Bank NV. “Another disappointment is possible, despite a ninth week of inventory declines in a row. So, the risk of a profit-taking way is still high.”

WTI for March delivery was at US$64.48/bbl on the New York Mercantile Exchange, up US$0.01 in London. Total volume traded was about 7% below the 100-day average. WTI closed at US$64.47 on the 23^rd January after advancing for a second session.

Brent for March settlement lost US$0.27 to US$69.69/bbl on the London-based ICE Futures Europe exchange, after rising 1.4% on the 23^rd January. The benchmark crude traded at a premium of US$5.26 to WTI.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, decreased by 3.57 MMbbl last week, the American Petroleum Institute was said to report on the 23^rd January. Gasoline inventories rose by 4.12 MMbbl, the API said.