Oil rises on threatened Nigeria strike, short covering

Jon Howard
December 8, 2017

The oil prices were trading higher after a sluggish and a lackluster performance on the previous trading session.

The unexpected rise in product inventories comes against the backdrop of bullish sentiment on oil prices following OPEC's decision last week to extend the output agreement through 2018.

Oil prices climbed more than 1 percent on Thursday due to a threatened strike in Nigeria and as traders cover shorts after sharp losses the previous day brought on by an unexpectedly large rise in US stocks of refined fuels. The motor fuel inventories were also rising and were also pulling the prices up after succeeding lackluster performance.

Recent spurt in oil prices is triggering a response from the suppliers. West Texas Intermediate, the United States benchmark for the price of oil, was down 1.1 per cent to $56.95 per barrel.

Marketmen said the fall in crude oil futures was mostly attributed to trimming of positions at futures trade in tandem with a weakening trend in Asian trade after official data confirmed a huge build in USA gasoline supplies, offsetting the data showing crude stockpiles fell for the third straight week.

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Overall futures were steady and were changed by incremental figures after sinking last Wednesday by a whopping2.9%.

Meanwhile, the Brent deliveries for February managed to steady today, adding a total of 3 cents to $61.25 on the London-based ICE Futures Europe exchange after drastically shedding a total of 2.6% yesterday.

Data from the Energy Information Administration (EIA) on Wednesday showed that US crude oil inventories fell by 5.6 million barrels in the week to December 1, to 448.1 million barrels, putting stocks below seasonal levels in 2015 and 2016.

Brent futures rose 98 cents, or 1.6 percent, to settle at $62.20 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 73 cents, or 1.3 percent, to settle at $56.69. Analysts such as Goldman Sachs have said that the expected rise in demand in 2018 would mostly be offset by US and Canadian supply growth.

U.S. gasoline production fell by 464,000 bpd (barrels per day) or 4.5% to 9.7 MMbpd (million barrels per day) on November 24-December 1, 2017, according to the EIA.

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