US crude oil inventories saw above expectation rise last week, EIA reveals

Despite the extremely bearish fundamental picture borne out by the EIA data, oil made large gains on the day based mostly on the weaker dollar.

The EIA report showed a modest decline of 7,000 barrels a day in domestic crude production to 9.214 million barrels a day.

But Goldman Sachs said it was “highly unlikely” the Organisation of the Petroleum Exporting Countries would co-operate with Russian Federation to cut output, saying such a move would also be self-defeating as stronger prices would bring previously shelved production back to the market.

The sultanate’s Oil Minister, H E Mohammed al Rumhi, has said the country is ready to cut five to ten per cent of its crude output if an agreement is reached among OPEC and non-OPEC countries.

United States benchmark West Texas Intermediate for delivery in March leaped US$2.40 – RM9.97 – (8.0 per cent) to US$32.28 a barrel on the New York Mercantile Exchange. The report indicated that global oil consumption in 2014 grew 0.8 barrels per day; however, global oil production grew more than twice that amount to 2.1 million barrels per day.

Lavrov said a formal meeting between OPEC and other oil producers could be called “if everyone wants it”. Analysts had forecast a 1.7 million-barrel gain in gasoline inventories.

The data showing the hefty build pulled crude down initially, but after USA crude futures dipped below $30 a barrel they recovered quickly, trading at $31.29 at 11:16 a.m. (1616 GMT).

Oil prices hit a 13-year low in January.

LONDON-Oil prices wavered on Thursday with support from a weaker dollar, but analysts see the global oversupply of crude preventing a sustainable rally. The unexpected resilience of high-cost producers, who are still pumping at full tilt, is stoking fears that prices will stay lower for longer.

Adding to the buying is renewed hope that Russian and OPEC officials will meet to discuss cutting production to address a glut that has driven prices to around 12-year lows.

OPEC production also jumped to its highest in recent history in January as Iran increased sales after the lifting of sanctions and rivals Saudi Arabia and Iraq also boosted supply, a Reuters survey showed last week.

US gasoline inventories rose to a record high, soaring 5.9 million barrels to 254.4 million barrels.

U.S. bank Citigroup said oil is the “trade of the year” and predicted a gain in prices in the second half of the year along with UBS and Societe Generale.

That was nearly double market expectations and took total crude inventories to 502.7 million, topping 500 million barrels for the first time on record. Morgan Stanley says Brent could end 2016 at $29 a barrel, $5 below where the market is today.