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Oil Rallies as US Crude, Gasoline Stockpiles Fall, Beat Expectations

July 19, 2017 at 17:04 by Andrew Moran

Oil futures are rising on Wednesday after new government data show US crude and gasoline stockpiles tumbled, beating analysts’ expectations. Thanks to the third straight week of declines, oil prices have spiked more than 1% on the news.

August West Texas Intermediate (WTI) futures surged $0.48, or 1.03%, to $46.88 per barrel at 16:48 GMT on Wednesday on the New York Mercantile Exchange. US crude did pare some of its gains after further data revealed an increase in total domestic crude production.

Brent, the international benchmark for oil prices, is also climbing higher midweek. September Brent crude futures increased $0.57, or 1.17%, to $49.43 a barrel on London’s ICE Futures exchange.

According to the Energy Information Administration (EIA), US crude inventories tumbled by 4.7 million barrels to 490.6 million barrels in the week ending July 14. Analysts predicted a drop of 3.2 million barrels. Gasoline stockpiles also dipped by 4.4 million barrels. US output spiked by 32,000 barrels per day (bpd) to top 9.4 million bpd.

The banks are still expecting major losses in oil prices this year and in 2018. Goldman Sachs sees US crude plunging to $40 a barrel and Barclay’s expects Brent futures to plummet to $48 sometime next year.

Many analysts remain concerned about the international oil market being oversupplied. Despite Organization of the Petroleum Exporting Countries (OPEC) members reaching 97% compliance, Nigeria and Libya have boosted their production levels – they are exempt from the oil cartel’s output freeze. OPEC officials have noted that they are holding negotiations with the two countries to limit their output to help ease the supply.

A Saudi Arabian industry source told CNBC that OPEC wants to tighten the market:

We hope to accommodate the rise in production from Libya and Nigeria taking into consideration other supply adjustments as well. But we emphasize that we have to work together with other producers and with the two countries

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