Oil futures rise but traders warn on premature rally

  • Oil futures rise but traders warn on premature rally

Oil futures rise but traders warn on premature rally

However, it remains true as ever that production from an average new well will have fallen off by half within a year of operation. Inventories slid by 4.94 million barrels as output fell for the 10th time in 11 weeks, according to a report from the Energy Information Administration.

Crude oil prices could see key support at $27 per barrel. The data also showed that gasoline draw of 116,000 barrels and distillate build of 2.68 million barrels. It has been slowly slipping from the 9.6 million barrels a day peak a year ago. The remarks contradict others from Saudi Arabia's deputy crown prince, Mohammed bin Salman, who said last week that the Saudis will only agree to a production freeze if Iran and other major producers agree to do the same.

According to the communique which contained the 25 goals that these countries have agreed to pursue, APPA members have indicated that in trying to make its hydrocarbon resources work for its people and economy, they would now be focusing their efforts on value addition rather than production volumes as it is often the case. The Saudis have decided that it is in their best interests to pump more, not less, oil now because they see an end to the age of oil, at least as we've known it since the end of World War II.

Oil has swung between gains and losses since Friday amid speculation about whether an agreement can be reached at the meeting in Doha.

Brent futures rose by $1.45 to $39.32.

Even if OPEC decides on an oil output freeze, significantly more oil is being produced than is being consumed.

A fall in imports dragged down total stocks. Preliminary data from the American Petroleum Institute (API) had estimated a 4.3 million barrel draw for the period.

Goldman Sachs said that it was "less willing to believe in a sustained OPEC production freeze or cut" and instead expected OPEC's production to rise by 600,000 barrels per day (bpd) this year and by 500,000 bpd in 2017.

US production, meanwhile, fell 14,000 barrels last week to 9.008 million barrels per day, declining to its lowest level since November, 2014. Refinery utilization rates rose by 1 percentage point, although usage could ebb with more maintenance expected this month. That crude inventories are down should come as no surprise. West Texas Intermediate, the US benchmark price for oil, was up 2.8 percent to $36.91 per barrel. Previous year at this time, a gallon of regular gasoline cost $2.388 on average in the United States.

The ups and downs in crude oil prices impact ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Guggenheim S&P 500 Equal Weight Energy (RYE), the PowerShares DWA Energy Momentum (PXI), the DB Crude Oil Double Short ETN (DTO), and the Direxion Daily Energy Bear 3x ETF (ERY).