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Oil Futures Rise from 10-Month Lows, Prices Still Under Pressure

June 22, 2017 at 16:49 by Andrew Moran

Oil prices are finally climbing on Thursday from multi-month lows. Crude futures are looking to make some gains after posting massive losses over the past week. Oil was supported by the second consecutive week of declines in US crude supplies, but the commodity is still under pressure from the global supply glut.

July West Texas Intermediate (WTI) futures rose $0.59, or 1.39%, to $43.12 per barrel at 16:33 GMT on Thursday on the New York Mercantile Exchange. US crude is looking to rebound after plunging to a 10-month low on Wednesday. Despite the welcomed jump from investors, US crude prices are still in bear market territory, falling nearly $10 over the last several weeks.

Brent, the international benchmark for oil prices, is also rallying towards the end of the trading week. August Brent futures increased $0.72, or 0.61%, to $45.54 a barrel on London’s ICE Futures exchange.

According to the US Energy Information Administration (EIA), domestic crude supplies slipped by 2.5 million barrels for the week ending June 16. This is more than the two million barrels analysts had expected. The EIA report further highlighted that weekly domestic production spiked by 20,000 barrels to 9.35 million barrels per day (bpd). Meanwhile, gasoline stockpiles tumbled by 600,000 barrels and distillate stockpiles surged by 1.1 million barrels.

Even with tropical storm Cindy hitting the Gulf Mexico, a region that maintains 17% of US crude, weather events were unable to significantly impact production. Although some operations were slightly disrupted, US crude prices were hardly touched.

With oil prices plunging, US firms continue to boost their output – analysts forecast that US production levels will top 10 million bpd sometime next year. Reports suggest that shale producers can remain profitable even if prices were to dip below $40 per barrel. The international supply glut will not sink anytime soon, even if Organization of the Petroleum Exporting Countries (OPEC) freezes production at 1.8 million bpd for another nine months.

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