Oil prices rose for an eighth day Monday, in the longest winning streak in more than five years. US consumption of distillates, including diesel and heating oil, came in 9 percent lower than the EIA originally estimated at 3.79 million barrels a day.
OPEC has lost its grip on the oil market, but oil prices will likely set a bottom in the low $40s per barrel, according to the latest CNBC Oil Survey. The OPEC members have made some bullish statements and have done their bit in pushing the oil prices higher but seeing that these have had minimal effect so far, they could probably be using this tension as an opportunity to affect the supply side and push the oil prices higher.
Oil prices rose to a two-week high yesterday, extending a rally into a sixth straight session after a decline in weekly United States production eased concerns about deepening oversupply. Nigerian production is back at a 17 month high of 2.0 mbpd while Libyan output has almost tripled from past year with production nearing 0.95 mbpd. "It gets tougher to use up all that crude as refinery utilization starts to ease off as we move past the peak of summer driving season".
Crude oil rose for a sixth straight session on Thursday to its highest since June 19 on a decline in USA output, but ongoing worries about global oversupply continued to drag. We noted how the continued expansion of U.S. shale oil output and the introduction of new energy alternatives have diminished OPEC's ability to influence the oil markets.
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With world oil inventories swelling despite a global pact on cutting output and crude prices falling by a fifth in the past month, OPEC appears to be losing its battle to balance the market. The correlation between crude oil prices and Wall Street indices is an important one. Last week, the U.S. Energy Information Administration reported a 2,5-million-barrel decline in crude oil inventories, but it also reported a growth in U.S. crude production. While some traders are optimistic about this possibility, others are concerned that a recovery of Libyan and Nigerian supplies and production have kept the surplus at over 3 billion barrels too much to help reign in prices.
Domestic crude oil production fell 100,000 barrels per day to 9.25 million barrels per day. The mood turned more two week ago, when the International Energy Agency's June monthly market report showed a net build in OECD oil stocks over January-April, and projected more of the same for May based on preliminary data. Everyone has lowered their predictions, expecting oil prices to remain "lower for longer".
WTI light sweet crude was up 15 cents at $46.15 a barrel, trying for the eight straight daily advance following a mid-June collapse into bear market territory.