This week Oil prices were set to fall, with both benchmarks dropping slightly on Friday. On Thursday, the experts claimed that the global oil supply increased in February by 700,000 barrels per day. Earlier in last year, the global oil supply was 97.9 million barrels per day. It was reported by the U.S. government that the crude stockpiles increased by a more-than-expected 5 million barrels. This rose for a third straight week.
Oil prices hit their highest levels in more than three years despite warnings that a 13-percent rally since early December was close to running its course. It was observed that the Brent crude futures rose 44 cents to $69.64 a barrel by 10:12 a.m. ET. The contract earlier hit $69.88, its highest since December 4, 2014, the last time Brent was above $70 a barrel. U.S. West Texas Intermediate crude futures were up 87 cents, or 1.4 percent, at $64.44. They topped out at $64.77, a high going back to December 8, 2014. This would be not wrong to say that the Oil prices got inadequate support from the equities market.
Analysts said that the undeniable fact is that crude oil inventories are at their lowest level since August 2015. As per some analysts, OPEC is edging ever closer to its desired target of reducing OECD industrial stocks to the five-year average. Recently a data was released by the U.S. Energy Information Administration. It informed that crude inventories fell by almost 5 million barrels to 419.5 million barrels in the week. Despite expectations of output breaking through 10 million bpd, U.S. production also fell by 290,000 barrels per day to 9.5 million bpd.
UAE oil minister and current OPEC President Suhail al-Mazrouei said that they expect the market to balance in 2018 and that the producer group is committed to its supply reduction pact until the end of this year. Production cuts have underpinned prices. It was led by the Organization of the Petroleum Exporting Countries and Russia. This started in January 2017 but now it is set to continue throughout 2018.
To a halt, there is downward pressure in the physical market. Here Iran and Iraq cut their prices to remain competitive. Iran and Iraq are second and third-largest producers of OPEC. There are ample of Fuel inventories in Asia and some are rising. According to the data of EIA, it is to be believed that U.S. gasoline stocks climbed higher. It was expected to climb up to 4.1 million barrels.