Crude Oil Higher on Mixed Data

This week’s draw is the seventh week of draws in the last 10 weeks, with a total draw of almost 27 million over the last ten weeks

For the 2017 summer driving season (April–September), U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer

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Crude oil is higher following release of #API weekly inventory data. The American Petroleum Institute (API) reported a draw of 4.62 million barrels in United States crude oil inventories, compared to analyst expectations of a draw of 3.5 million barrels for the week ending June 2.

This week’s draw is the seventh week of draws in the last 10 weeks, with a total draw of almost 27 million over the last ten weeks.

Gasoline inventories rose 4.08 million barrels last week, according to the API report. Distillate inventories also rose by 1.75 million barrels, while inventories at the Cushing, Oklahoma, site fell by 1.56 million barrels.

The U.S. Energy Information Administration report on oil inventories is due on Wednesday at 10:30 a.m. EDT. Please check Stockwinners Market Radar for the data.

EIA Lowers Brent Forecast

Energy Department’s the Energy Information Administration (EIA) released its latest forecast for oil prices:

Reports Highlights
  • North Sea Brent crude oil spot prices averaged $50 per barrel in May, $2/b lower than the April average. EIA forecasts Brent spot prices to average $53/b in 2017 and $56/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018. NYMEX contract values for September 2017 delivery that traded during the five-day period ending June 1 suggest that a range of $39/b to $64/b encompasses the market expectation for WTI prices in September 2017 at the 95% confidence level.
  • The Organization of the Petroleum Exporting Countries (OPEC) met on May 25 and announced an extension to voluntary production cuts through March 2018 that were originally set to end in June 2017. EIA forecasts OPEC crude oil production will average 32.3 million barrels per day (b/d) in 2017 and 32.8 million b/d in 2018.
  • U.S. crude oil production averaged an estimated 8.9 million b/d in 2016. U.S. crude oil production is forecast to average 9.3 million b/d in 2017 and 10.0 million b/d in 2018. The 2018 forecast exceeds the previous record level of 9.6 million b/d set in 1970.
  • For the 2017 summer driving season (April–September), U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer. The higher forecast gasoline price is primarily the result of a higher forecast crude oil price. The forecast annual average price for regular gasoline in 2017 is $2.38/gal.
  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas to fall from an average of 34% in 2016 to less than 32% in both 2017 and 2018 as a result of higher expected natural gas prices. Coal’s forecast generation share rises from 30% in 2016 to 31% in 2017 and 2018. Non-hydropower renewables are forecast to provide 9% of electricity generation in 2017 and nearly 10% in 2018. The generation share of hydropower is forecast to be nearly 8% in 2017 and 7% in 2018. The nuclear share of generation remains just under 20% in both 2017 and 2018.
  • Coal exports for the first quarter of 2017 were 58% higher than in the same quarter last year, with steam coal exports increasing by 6 million short tons (MMst). Coal producers that have completed bankruptcy reorganizations and companies that purchased bankrupt assets have increased both exports and production in 2017. EIA expects growth in coal exports to slow in the coming months, with exports for all of 2017 forecast at 72 MMst, 11 MMst (19%) above the 2016 level. The increase in coal exports contributes to an expected 8% increase in coal production in 2017.

WTI is up 60 cents to $48 per barrel, Brent is up 50 cents to $49.97 per barrel.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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