Commodities News

Oil slips despite OPEC+ sticking to moderate rise, U.S. stockpile draw

By David Gaffen

NEW YORK (Reuters) -Oil prices slipped from highs on Wednesday even after OPEC+ stuck to planned moderate output increases despite pressure from top consumers to raise output more quickly after prices rallied to 2014 highs.

Brent crude was down 44 cents, or 0.5%, at $88.72 a barrel at 11:13 a.m. EST (1613 GMT) U.S. West Texas Intermediate crude fell 67 cents, or 0.8%, to $87.53.

Global benchmark Brent has remained within striking distance of $90 for several days now, buoyed by ongoing concerns about tight supply across major world producers and steadily increasing demand. On Friday, both benchmarks hit their highest since October 2014, with Brent touching $91.70 and U.S. crude hitting $88.84.

U.S. crude stockpiles fell by 1 million barrels last week, against expectations for an increase, while distillate inventories also dropped amid strong demand both domestically and in export markets.

“Both commercial and strategic petroleum crude oil stocks drew and once again demand remains resilient and inventories have continued their decline,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

Lipow said some of the day’s price declines could be related to a spike in crude imports that he attributed to timing more than anything else.

The market also shrugged off OPEC+’s agreement to stick to moderate rises in its oil output with the group already struggling to meet existing targets and wary of responding to calls on its strained capacity for more crude from top consumers to cap surging prices.

The Organization of the Petroleum Exporting Countries and allies including Russia – known as OPEC+ – stuck with previously agreed-upon plans to boost output by 400,000 barrels per day.

The group has blamed surging prices on the failure of consuming nations to ensure adequate investment in fossil fuels as they shift to greener energy.

Several OPEC+ sources also said prices had been pushed up by Russia-U.S. tensions that has fanned fears that energy supplies to Europe could be disrupted. Washington has accused Moscow of planning to invade Ukraine, which Russia, the world’s second-largest oil producer, denies.

On Tuesday, Russian President Vladimir Putin accused the West of deliberately creating a scenario designed to lure it into war and ignoring Russia’s security concerns over Ukraine.

A major winter storm is expected to wallop much of the central United States and stretch to parts of the Northeast this week, bringing heavy snow, freezing rain, and ice, the National Weather Service said on Monday.

The storm comes days after a deadly winter blast and could boost prices of oil, especially as some regions substitute out natural gas where supply may be scarce.

Source : Reuters/

© Reuters. FILE PHOTO: Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. REUTERS/Aly Song/File Photo

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