Brent Crude Eases after Surprise Rise in U.S. Inventories

Posted by Joseph Keefe
Wednesday, January 24, 2018
U.S. crude, gasoline inventories climb as traders take put options to sell crude.
Brent oil prices eased on Wednesday, under pressure from a rise in U.S. crude and gasoline inventories although crude prices remained near three-year highs.
Benchmark Brent futures dipped 8 cents to $69.88 a barrel at 0930 GMT, after climbing above $70 this month for first time since 2014. U.S. West Texas Intermediate (WTI) futures were up 16 cents at $64.63 a barrel.
The American Petroleum Institute said on Tuesday crude inventories rose by 4.8 million barrels in the latest week, compared with expectations for a decline of 1.6 million barrels. Gasoline inventories also rose.
Official U.S. government inventory data is due out later on Wednesday and will watched to see if the numbers confirm a rise.
"The market has rallied by 50 percent and a lot of investors have been involved for a long time," Saxo Bank senior manager Ole Hansen said.
"At what level would we start to attract some nervousness on the downside?" he said. "We probably need to break below $60 on WTI to put the cat among the pigeons ... It's going to take more than just a stock-build today to change that equation."
Money managers hold more bullish positions in crude futures and options than at any time on record, which has been encouraged by falling global inventories on the back of supply cuts by OPEC, Russia and its allies.
But some traders are showing signs of seeking protection against a fall in crude prices. Trading data shows open interest for Brent put options for a selling at $70, $69 and $68 per barrel has climbed since the middle of last week.
Sukrit Vijayakar energy consultancy Trifecta said the rising options to sell were a result of huge amounts of long positions that have been built up in past months.
"We still have ... nine long barrels for every short barrel, so a reversal should be interesting to watch," he said.
But traders said oil prices were unlikely to fall far as markets were supported by strong global economic growth pushing up oil demand and output restraint by the Organization of the Petroleum Exporting Countries, Russia and others.

The deal to withhold output started in January last year and is currently set to last through 2018. 

By Amanda Cooper

Categories: Contracts Energy Finance Fuels & Lubes Government Update Logistics Middle East Tankers

Related Stories

Malaysia’s Petronas and Oman’s OQEP Strengthen Oil and Gas Ties

Southeast Asia’s 2GW Cross-Border Offshore Wind Scheme Targets 2034 Buildout

US Pressure on India Could Propel Russia's Shadow Oil Exports

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

Pakistan, Türkiye Deepen Oil and Gas Ties with Offshore Indus-C Block Deal

Propane’s Economic Edge for Ports During Trade Uncertainty

Brownfield Output Decline Accelerates, says IEA

Floating Offshore Wind Test Center Planned for Japan

Santos and QatarEnergy Agree Mid-Term LNG Supply

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

Current News

Malaysia’s Petronas and Oman’s OQEP Strengthen Oil and Gas Ties

Southeast Asia’s 2GW Cross-Border Offshore Wind Scheme Targets 2034 Buildout

Pharos Energy Kicks Off Drilling Campaign Offshore Vietnam

Viridien to Shed More Light on Malaysia’s Offshore Oil and Gas Potential

US Pressure on India Could Propel Russia's Shadow Oil Exports

Energy Drilling’s EDrill-2 Rig Starts Ops for PTTEP in Gulf of Thailand

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

ABL Secures Rig Moving Assignment with India's ONGC

Pakistan, Türkiye Deepen Oil and Gas Ties with Offshore Indus-C Block Deal

Eni-Petronas Gas Joint Venture Up for Launch in 2026

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com