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US Crude Climbs Above $70 As Domestic Supplies Fall

September 19, 2018 at 15:45 by Andrew Moran

US crude oil futures are surging more than 1% midweek after the US government reported domestic supplies tumbled. While the crude market has been booming over the last 12 months, investors remain concerned that top oil producers will not cover the global supply shortfall, though experts are warning that demand could fall amid international trade disputes.

October West Texas Intermediate (WTI) crude oil futures advanced $0.86, or 1.23%, to $70.71 per barrel at 15:14 GMT on Wednesday on the New York Mercantile Exchange. US crude prices have swelled more than 20% year-to-date, and double that since September 2017.

Brent, the international benchmark for oil prices, is posting modest gains in the middle of the trading week. November Brent crude futures rose $0.20, or 0.25%, to $79.23 a barrel on London’s ICE Futures exchange. Brent is also rallying in 2018, recording a 24% YTD bump.

According to the US Energy Information Administration (EIA), domestic crude inventories declined by 2.1 million barrels for the week ending September 14, while US oil output is holding steady above 11 million barrels per day (bpd). Gasoline supplies tumbled by 1.7 million barrels, while distillate stockpiles tacked on 800,000 barrels.

The Baker Hughes total rig count stood at 1,055, up from 1,048 a week ago.

With sanctions scheduled to be applied on Iran, the Organization for Petroleum Exporting Countries (OPEC) and other top oil nations will meet in Algeria on Sunday to determine how to distribute planned increases to offset Iran’s expected production decreases. Production volumes might also be talked about, considering that Saudi Arabia reportedly desires oil to stay between the $70 and $80 trading range.

Investors are warning that intensifying trade spats between the US and the rest of the world could diminish demand for oil because of weakening economies. So far, oil has been immune from the growing trade tensions and retaliatory tariffs. But, with many experts warning that the US-China trade war may linger on for several more years, it is not out of the realm of possibility.

In other energy commodities, September natural gas futures added $0.05, or 1.79%, to $2.74 per million British thermal units (btu). September gasoline futures were flat at $2.018 a gallon. September heating oil futures were also unchanged at $2.096 per gallon.

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