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Oil Futures Rebound on Encouraging Domestic Demand

August 2, 2017 at 17:10 by Andrew Moran

Oil futures are climbing higher midweek as investors comb through new US government data. The latest report found that there was a smaller-than-expected decrease in US crude stockpiles, but there was higher domestic demand than what was initially anticipated. Oil prices were first down, but they are now in the green.

September West Texas Intermediate (WTI) futures rose $0.19, or 0.35%, to $49.33 per barrel at 16:52 on Wednesday on the New York Mercantile Exchange. US crude prices have been trading higher in recent weeks after tumbling to as low as $42.

Brent, the international benchmark for oil prices, is also rallying in the middle of the week. October Brent crude futures jumped $0.30, or 0.58%, to $52.08 a barrel on London’s ICE Futures exchange.

According to the Energy Information Administration (EIA), US crude inventories declined by 1.5 million barrels to 481.9 barrels in the week ending July 28. This is down from the three million barrels analysts were expecting. Gasoline stockpiles fell by 2.5 million barrels, up from analysts’ forecasts of 636,000 barrels, and distillate stockpiles dipped by 150,000 barrels, down from projections of 525,000 barrels.

Crude futures started off the Wednesday trading session in the red, but traders began to take advantage of the lower prices, which helped increase US and Brent crude prices to above $49 and $52, respectively.

Investors were concerned about new reports that production levels by the Organization of the Petroleum Exporting Countries (OPEC) increased in July, primarily because of the surge in output in Libya. The official OPEC monthly oil report will be released on Thursday.

Meanwhile, OPEC is scheduled to hold a two-day meeting next week to discuss the production freeze. Reportedly, there have been a handful of smaller producing nations, like Ecuador, that say they cannot withstand further production cuts while prices remain low. OPEC has been negotiating with Nigeria and Libya to freeze their output numbers to help cut the global oil glut.

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