By Srinivas Chowdary Sunkara // petrobazaar // 13th Feb 2020.
Brent oil futures to be delivered in April rose $1.78 or 3.3% to close at $55.79 on London based ICE Futures Europe exchange and WTI oil futures for March delivery advanced $1.23 or 2.46% to settle at $51.17 on NYMEX, last night. In Shanghai, crude oil main contract futures prices up by 5.1 Yuan or 1.28% at 403.3 Yuan/barrel where as MCX crude futures in India settled Rs.82 up at Rs.3662 yesterday. Brent traded at a premium of $4.62 over WTI.
The world crude oil price indexes rebounded and advanced during yesterday's session after lowest number of virus cases report stoked investor hopes that the fuel demand in the world's second largest consumer may begin to resume. The virus headlines outweighed the bearish weekly numbers reported by the U.S government yesterday. As per the report, U.S crude oil inventories piled up by 7.5Mbpd compared with analysts expectation of 3Mbpd while marginal draw down in fuel inventories indicated that the gasoline demand started to rebound which helped to offset the bearish crude headline. U.S crude production stood at 13Mbpd, rose from previous week. Imports were increased while exports numbers turned down. Turning to monthly oil reports, OPEC revised 230,000 bpd down in global oil demand for the year 2020. OPEC assessed that the non-OPEC production growth will go down and reported that the U.S is expected to remain the main growth driver in 2020.
The fundamental question now is that OPEC produced 33.87 Mb/d in Nov 2016 when the group took the decision to rein in supplies to prop up prices. Today, The group production stands at 28.86 Mbpd, Roughly 4.94 Mbpd less compared back to Nov 2016. The group could not achieve anything in numbers when oil price is hovering around $50, demand is going down and supplies are pushed up led by U.S. The technical committee advised for further deeper cuts, will they achieve what they want? A million dollar question! Good day to all.
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