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Oil Prices Dip amid Mixed US Crude Data

January 5, 2017 at 18:04 by Andrew Moran

The oil futures rally was unable to continue during the third trading session of 2017. Oil prices fell as mixed US crude data dampened any momentum that oil had heading into the New Year.

February West Texas Intermediate (WTI) crude futures tumbled $0.16, or 0.30%, to $53.10 per barrel at 16:38 GMT on Thursday on the New York Mercantile Exchange. Oil futures had been trading between positive and negative territory throughout the trading session.

Brent crude is not doing any better. March Brent crude futures decreased $0.14, or 0.25%, to $56.32 a barrel.

Oil futures were impacted by a new report that US crude stockpiles declined. According to a new report from the US Energy Information Administration (EIA), US crude stockpiles fell by 7.1 million barrels for the week ending December 30. The American Petroleum Institute (API) pegged the number at 7.4 million barrels on Wednesday.

Meanwhile, gasoline supplies climbed by 8.3 million barrels and distillate stockpiles spiked by 10.1 million barrels, the EIA said in its report.

This comes as oil is looking to maintain the momentum it had in 2016. After collapsing to a 13-year low in February 2015, oil has surged about 70% since then. With Organization of the Petroleum Exporting Countries (OPEC) members proceeding with a production cut, oil prices could have another big year. As part of the November deal, Saudi Arabia agreed to slash output by 486,000 barrels per day (bpd).

With oil prices staying above $50, some experts are concerned that US producers may expand output in order to take advantage of the high prices. In other words, even if OPEC does maintain its production cut, higher oil prices may not be sustainable because of oversupply issues.

The next time OPEC meets will be on May 25, 2017 in Vienna. OPEC officials will decide at this meeting if they will continue to decrease their output levels.

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