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Oil Rallies as US Crude Inventories Fall

November 22, 2017 at 17:43 by Andrew Moran

Oil futures are trading as high as 2% midweek after a new US government report found domestic crude stockpiles fell. Crude investors will now look ahead to the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna on November 30.

January West Texas Intermediate (WTI) futures rose $0.87, or 1.53%, to $57.70 per barrel at 16:27 GMT on Wednesday on the New York Mercantile Exchange. US crude topped $58 for the first time since 2015 earlier in the trading session before paring those gains.

Brent, the international benchmark for oil prices, is also climbing higher in the middle of the trading week. January Brent crude futures jumped $0.34, or 0.54%, to $62.91 a barrel on London’s ICE Futures exchange.

According to the US Energy Information Administration (EIA), domestic crude inventories declined by 1.9 million barrels for the week ending November, which is lower than the initial forecast of 2.1 million barrels. US oil output increased by 13,000 barrels per day (bpd) to 9.658 million bpd. Gasoline stockpiles remained flat, while distillate stockpiles inched higher by 300,000 barrels.

Traders will now be paying attention to any reports pertaining to OPEC’s meeting next week in Vienna. It is widely expected that the oil producers will agree to extend the production freeze by an additional nine months. Investors are urging OPEC to go beyond an output freeze by lowering the production cap from 1.8 million bpd.

Industry experts also note that the OPEC meeting will focus on Venezuela, which accounted for about one-third of the cartel’s supply cuts last month. The Latin American socialist country is experiencing a collapse in oil production as the government faces multiple defaults on its immense levels of debt. Caracas is crippled by $60 billion worth of debt and another $150 billion in sovereign loans. Thanks to price controls, production quotas, and other socialist economic policies, the oil-rich nation is crumbling and undergoing a humanitarian crisis.

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