Oil prices climb as traders eye another US crude drawdown

Brent weekly chart

Oil prices fell on Monday as a rally at the end of last week prompted investors to close positions at a higher price, against a backdrop of signs the global market is starting to rebalance.

North Sea crude oil, the benchmark in Europe, went up United States dollars $51.87 a barrel, 0.50 percent higher than the close of the previous day. However, the data "reinforces this theory that even amid this downturn, crude production in the U.S.is ticking higher or stable".

"We are now seeing some profit-taking after Friday's strong rally ahead of this week's inventory data", said Hans van Cleef, senior energy economist at ABN Amro.

Iran exported some 2.6 million barrels of crude oil in July.

The last batch of EIA data showed crude stocks had fallen by almost 9 million barrels during the week ended August 11, the ninth reduction in 10 weeks. We can still remember how Libya's exit and reentry into the global energy market jostled oil prices up and down.

Data from the American Petroleum Institute (API) released yesterday showing an increase in gasoline inventories surprised the market, especially as demand traditionally peaks during the USA driving season.

According to analysts - crude inventories are expected to draw by 3.5m barrels in the Aug 18 week. However, opinion over the extent of shale's resilience is sharply divided, and a weekly drop in production could swing market participants from one camp to another.

The API had estimated that US crude oil inventories were down by 3.595 million barrels lower than in the previous week, but that gasoline inventories had seen surprising build of 1.4 million barrels-a figure that pushed oil prices down on the market. But oil production elsewhere has been rising, blunting the impact of output cuts by OPEC and its allies.

"OPEC crude oil exports fell by a whopping 750,000 bpd through the first half of August".

Refining runs of 17.5 million less imports of 8.8 million and domestic production of 9.53 million barrels a day last week continue to imply that stockpiles are not falling fast enough to push prices higher before the summer driving season ends.

On the coast of the Gulf of Mexico are about 30 oil refineries with a combined capacity of about 7 million barrels per day. In last week, there was a decrease of 5 operating rig in the U.S., pushing the total number to 763, the highest since April 2015.

API releases its data after US trading ends Tuesday afternoon.

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