Oil prices are performing a precarious balancing act as US oil production increases simultaneously with reduction in output from OPEC and other oil producers.
The price for Benchmark crude futures hardly budged from $55.86 a barrel at 6:57am. Yesterday’s price of $56.65 was the high for the month, just before it shrunk slightly today.
Only 6 cents separated today’s and yesterday’s price for US West Texas Intermediate crude futures, falling slightly. Yesterday’s price was the highest a barrel had been since March 7, at $53.76.
The weekly Energy Information Administration (EIA) report points to US oil output rising, while also showing that US stockpiles at the crude hub in Cushing, Oklahoma went up by 276,000 barrels during the week which ended on April 7.
Other data, however, showed a surprising fall in overall US crude inventories. Last week inventories fell by 2.2 million barrels while imports went down by 717,000 barrels per day.
“We saw a bit of a reversal in oil prices (on Wednesday) and it came despite some positive news,” chief market strategist at Sydney’s CMC Markets. “It does appear that there is bit of focus on the data that came alongside inventory numbers which showed further increase in U.S. production.”
The price of crude oil approached just below $99 a barrel on Wednesday in Asia due to investor’s reaction to a surge in US oil supply inventories combined with slower than hoped-for economic growth.
The price of benchmark crude, to be delivered in March, climbed by 15 cents to $98.63 per barrel in Singapore in the late afternoon, just in time to make the electronic trading deadline on the New York Mercantile Exchange. By the end of the trading day the contract’s price fell by 30 cents to rest at $98.48 on Tuesday.
Brent crude also rose by 19 cents per barrel, to settle at $111.17 on the ICE Futures Exchange in London.
According to the American Petroleum Institute, crude inventories went up by 2.1 million barrels last week. In a survey conducted by Platts, the energy information section of McGraw-Hill Companies, of analysts’ predictions, they found that there had been a prediction of an increase in the inventories of 3.0 million barrels.
"U.S. economic releases tilted toward the bearish side, and that these figures followed last Friday's negative GDP guidance conjured up images of some disappointing employment data," energy consultant Ritterbusch and Associates said in a report. "A difficult, choppy trading environment could be sustained well into February."