Crude oil inventories surge again

West Texas Intermediate (WTI) crude futures were down 12 cents at $53.74 a barrel.

So, here goes the strategy, debit put spread = Go long 2w ATM -0.49 delta Put + Short 1W (1%) OTM Put with lower Strike Price with net delta should be at around -0.15.

“Improve on compliance, cut production further and extend the deal for the second half of the year if you want to avoid yet another year of global oil inventory builds”.

OPEC and non-OPEC countries, including Russian Federation, agreed in November to reduce output by about 1.8 million barrels per day following a sharp drop in oil prices. “Right now, the dollar is affecting the market more than anything”. Later, non-OPEC countries agreed to cut the output by 558,000 barrels per day during the meeting held December 10, 2016.

Brent crude was 45 cents higher at $56.04 a barrel by 0950 GMT. Total volume traded was about 7 percent below the 100-day average. She gave no indication of the timing of the next hike in her prepared remarks.

Excluding Nigeria and Libya, which were exempt in the first supply deal to cut output since the financial crisis, Opec’s production in January stood at just under 29.9m barrels a day.

The International Energy Agency forecasts a growth in demand at a rate of 1.4 million barrels a day. Rather than boosting prices, this seemed to tell investors that the supportive influence of output cuts might fade sooner than previously expected even as swing output swells.

“They are waiting for the upturn”, said Bjarne Schieldrop, chief commodities analyst at SEB Markets.

Crude oil futures were lower Wednesday morning ahead of government data that may show US oil inventories at a record high.

OPEC’s closely-watched monthly report, the first data since the deal come in force, showed that top producer Saudi Arabia made a large cut in its crude output (reduction of 496,200 bpd), accounting for a lion’s share of reductions. Year-on-year, world oil supply declined by 460,000 bpd, according to the report.

“Any better-than-anticipated performance of the global economy, together with less crude price volatility will support oil demand, helping to accelerate the rebalancing in the oil market to the benefit of both consumers and producers”, the report added.