Oil Pares Losses After Supply Gain

Crude oil is flowing eastward as rising demand in Asia outstrips the West’s stagnant appetite. Distillate fuel demand averaged over 3.9 million barrels per day over the last four weeks, up by 8.9% from the same period previous year.

Wednesday’s oil price fall came after a rally on Tuesday when prices rose by over 3% on reports of a strike at Brazil’s state oil producer Petrobras and the closure of the Libyan oil export terminal.

Libya’s oil production has dropped to less than 400,000 barrels a day after the halt of shipments from Zueitina amid the escalating conflict between the country’s two rival administrations.

Oil has slumped more than 40% in the past year amid speculation that a global glut will be prolonged.

With autumn refinery maintenance season coming to an end, refinery utilization rates rose by 1.1 percentage points to 88.7 percent of capacity.

US crude output will retreat by about 10 percent in the 12 months ending April, according to Daniel Yergin, vice chairman of IHS Inc. On Tuesday, it hit its highest since October 13 at $48.36.

Benchmark U.S. crude futures were trading at US$46,17 per barrel in early trading up just three cents from their last settlement after falling in the previous session due to a rise in stockpiles. The European benchmark crude was at a premium of $2.49 to WTI. Traders expected USA stockpiles to gain for about 2.25 million barrels. Supplies are more than 100 million barrels higher than the five-year seasonal average.

Gasoline led energy futures higher.

A customer prepares to fill up his tank in a gasoline station in Nice December 5, 2014. YTD, CVX has generated negative free cash flow of about $5 billion (closer to flat including asset sales), and COP’s free cash flow checks in at negative $2.1 billion (including asset sales).

The thunder-stealer from official USA unemployment data on Friday – the ADP report – has shown 182,000 jobs were created last month – pretty much in line with consensus.

“US production does appear to have stabilised in the past two months”, analysts at Commerzbank said in a note to clients. It’s unlikely that OPEC will change their strategy. “The market is starting to factor a little of that into the price”.

While the rest of the world continues to guess about the future of the oil market, a new OPEC report marked “CONFIDENTIAL” has leaked that provides a few insight into OPEC’s long-term strategy and long-term oil price projections directly from the organization itself.