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Oil Stays Flat as Traders Weigh OPEC Cuts, Higher US Output

February 2, 2017 at 17:52 by Andrew Moran

Oil prices are trading relatively flat on Thursday as traders are weighing cuts by Organization of Petroleum Exporting Countries (OPEC) members and a sharp increase in US crude and gasoline stockpiles. After a two-session climb, oil futures may be retreating near the end of the trading week.

March West Texas Intermediate (WTI) crude futures tumbled $0.09, or 0.17%, to $53.79 per barrel at 16:25 GMT on Thursday on the New York Mercantile Exchange. US crude is poised to settle at its highest level since January 6.

Brent, the international benchmark for oil prices, is trading in the opposite direction. April Brent crude futures rose $0.09, or 0.16%, to $56.89 a barrel on London’s ICE Futures exchange.

The quiet trades are surprising some investors, especially since both US and Brent crude soared by more than a buck on Wednesday. However, after three tumultuous years, most experts do concur on one thing: the oil market has stabilized.

US and Brent crude are not making any considerable moves because traders are assessing the current situation in the international oil market. Although OPEC and non-OPEC members are moving ahead with the arrangement to slash oil production levels, US producers are ramping up their output efforts. This was something that many had warned about soon after OPEC agreed to cap their production numbers.

OPEC announced late last month that it is closer to reaching its target of 1.8 million barrels per day (bpd).

According to the US Energy Information Administration (EIA), US crude oil inventories increased last week by 6.5 million barrels to just under 495 million barrels. This is much higher than analysts’ initial forecasts of only 3.3 million barrels. Meanwhile, gasoline stocks soared by 3.9 million barrels, which also beat analysts’ projections of a tepid one million barrel jump.

This has been the trend in the US for the past year. American inventories have been hovering around record highs as US companies drilling for shale oil are trying to take advantage of higher oil prices.

Last month, the World Bank noted in a report that the average crude price in 2017 would be $55 per barrel. This represents a 26% increase from last year.

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