New York, US (BBN) – Crude futures rose on Thursday thanks to better-than-expected gasoline demand in the US, but analysts said strong growth in crude inventories will likely keep gains limited.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in March CLH7, +0.42 per cent traded at $52.55 a barrel, up $0.21 in the Globex electronic session, reports the Market Watch.
April Brent crude LCOJ7, +0.47 per cent on London’s ICE Futures exchange rose $0.24 to $55.36 a barrel.
A decline in oil prices reversed on Wednesday after the Energy Information Administration data showed gasoline inventories in the US fell by 0.9 million barrels in the most recent week, upending an expectation of a growth.
“The fall in gasoline stocks eased concerns amongst traders that had been growing over recent weeks,” said ANZ Research.
According to Platts Analytics, the figure shows that gasoline implied demand rebounded last week, up 631,000 barrels a day to 8.941 million barrels a day.
Crude inventories, however, was more bearish.
The data showed that while the latest growth in US crude inventories came below market expectations, it still expanded by 13.8 million barrels or up 3.8 per cent on a yearly basis.
“Crude imports have risen sharply over the last two weeks, and this coupled with recovering US production contributed to the build,” said Societe Generale in a note.
US crude imports rose by 1.1 million barrels a day from the previous week. Over the past four weeks, imports averaged about 8.5 million barrels a day, 10 per cent above the same four-week period a year ago, the agency said.
The latest EIA data also showed US crude production increased by 63,000 barrels a day last week to 8.98 million barrels.
The uptrend in US crude production is one of the most pressing threats to a multicountry effort to reduce global supply.
The Organization of the Petroleum Exporting Countries and 11 other heavyweight producers, such as Russia, late last year pledged to trim down production by 1.8 million barrels a day to support prices.
To be sure, global oil supply could still shrink and possibly move into a deficit later this year despite an increase from the US — as long as the non-US producers adhere to their production cut-back plan, said Grace Liu, the head of research at brokerage firm Guotai Junan.
The EIA predicts US production will likely grow by 100,000 barrels a day this year from 2016 and another 500,000 barrels a day by 2018.
“Longer-term, slowing fuels consumption growth in emerging markets, growth in US shale and Saudi Arabia’s substantial spare capacity will weigh on the price recovery,” said BMI Research.
Nymex reformulated gasoline blendstock for March RBH7, +0.64 per cent — the benchmark gasoline contract — rose 27 points to $1.5554 a gallon, while March diesel traded at $1.6406, 46 points higher.
ICE gasoil for March changed hands at $495.00 a metric ton, up $0.75 from Wednesday’s settlement.
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