Oil Prices Advance Despite Modestly Higher Greenback

Oil prices steady as reviving shale activity balances OPEC cuts

Oil prices steady as reviving shale activity balances OPEC cuts

Natural-gas futures, meanwhile, settled higher after the latest US supply decline matched expectations.

U.S. West Texas Intermediate (WTI) crude was up 39 cents, or 0.8 percent, at $52.73 a barrel.

Front-month WTI crude futures now trade at $US53.14 per barrel, up 3.75% from the levels hit earlier this week.

USA inventories tend to rise until late April when refinery demand accelerates ahead of the summer peak driving and demand season.

BP raised the oil price at which it can balance its books this year to $60 a barrel yesterday due to higher spending following a string of investments as annual earnings fell for a second consecutive year.

United States inventories of oil rose by 13.8 million barrels to 508.6 million barrels in the week ended February 3, according to the Energy Information Administration's (EIA) weekly oil report. This left total inventories minus strategic reserves at 508 million barrels, up some 37 million barrels from this time a year ago.

"A jump in weekly gasoline demand that suggests that the death of gasoline demand may have been greatly exaggerated", said Phil Flynn, senior market analyst at Price Futures Group, in a note Thursday. RBOB gasoline futures remained flat at 1.762 a gallon at the NYMEX. March heating oil edged up by just over half a cent to $1.642 a gallon.

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At least four tornadoes touched down in Louisiana late Tuesday morning, destroying homes and businesses and injuring residents. One of the warnings described a "large, extremely unsafe and potentially deadly" twister south of Hammond, Louisiana.


Last week, both EIA and API reported substantial builds in inventories, with the EIA figure at 6.5 million barrels for the week to January 27, exceeding API's estimate of 5.8 million barrels in additions to the stockpiles.

Oil prices rebounded 1.5% overnight despite a big jump in USA crude inventories.

Crude inventories climbed 13.8 million barrels in the week ended February 3 as imports increased, the Energy Information Administration said. However, Societe Generale oil analyst Michael Wittner said USA shale output was rebounding faster than expected as more rigs drilled better and more efficient wells more quickly. Tehran is exempt from OPEC's plan to cut supplies alongside Russian Federation and other independent producers, which started on January 1 and calls for reductions of nearly 1.8 million barrels per day.

Global investment bank Goldman Sachs told its clients that high fuel inventories and rising USA crude production imply "oil markets would be over-supplied for some time, but that they would drain gradually".

Demand for the feedstock slipped as refinery crude runs USOICR=ECI fell 54,000 bpd and refining utilization rates USOIRU=ECI edged down 0.5 percentage point to 87.7 percent of the nation's total capacity. Besides this, OPEC's high compliance levels and possibility of an Iran- U.S standoff is also supporting oil prices. Working gas is available to the market, but base gas, which is needed to maintain reservoir pressure, isn't.

Crude oil volatility has slumped to almost a 28-month low as the current rangebound nature of the oil market continues to be extended.

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