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US Crude Stays Above $50 After EIA Report

October 13, 2016 at 17:53 by Andrew Moran

US crude posted losses to start the Thursday trading session after the government reported the first weekly US crude supply increase in six weeks. US crude recovered soon after and stayed above $50.

November West Texas Intermediate crude climbed $0.12, or 0.24%, to $50.30 per barrel at 17:25 GMT on the New York Mercantile Exchange. US crude has managed to stay above the crucial $50 threshold after the Organization of the Petroleum Exporting Countries (OPEC) agreed to cap oil production efforts.

December Brent crude rose $0.10, or 0.19%, to $51.11 a barrel on London’s ICE Futures exchange. Brent crude has also traded above the $50 mark ever since the OPEC announcement was made.

Oil has had a great 2016. Since reaching a 12-year low in February, oil has advanced more than 70%.

Despite the jump in US crude supplies, oil was largely unaffected. According to the Energy Information Administration (EIA), domestic crude supplies spiked by 4.9 million barrels in the week ending October 7. Analysts had projected an increase of between 250,000 and 670,000. Also, estimates from the American Petroleum Institute (API) were pegged at 2.7 million barrels. For the past five weeks, there have been continuous supply declines.

Moreover, oil futures were supported after record Chinese imports were reported. Last month, the world’s second-largest economy had imported record volumes of crude oil. China’s September crude imports skyrocketed 18% to 33.06 million tons, or 8.04 million barrels per day (BPD). The US imported 7.98 million bpd. This is the third time in a year that China beat out the US as the planet’s top buyer of foreign oil.

Traders feared that oil futures would come under major pressure after OPEC reported a jump in output. OPEC agreed at an informal Algiers meeting to cap overall production at 33 million bpd late last month. This is the first oil output cut in eight years.

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