Strong Crude Draw Boosts Oil Prices

Strong Crude Draw Boosts Oil Prices

The authority said crude oil inventories in the week to September 29 dropped by as much as 6 million barrels to 465 million barrels. Additionally, it materialized on visibly lower volume than the earlier decline, which increases doubts about oil bulls' strength and a further rally.

In August 2017, OPEC and participating non-OPEC producing countries recorded the highest conformity ever with their voluntary adjustments in production, achieving a level of 116 percent.

For many at the annual Asia-Pacific Petroleum Conference in Singapore, one of the global oil industry's biggest events, the clash means prices will remain in a narrow band of $50-$60 a barrel the rest of the year and into 2018. And this has exerted some downward pressure on the oil price.

This pro-bearish scenario is also reinforced by news that OPEC crude oil output increased in the previous month because of higher supplies from Iraq and Libya.

Analysts say that a so-called market rebalancing is now well underway, meaning that demand is no longer undershooting available supply.

Azerbaijan's Energy Ministry reported that the country is committed to oil cut deal and daily oil production in the country amounted to 785,700 barrels in September, 733,000 barrels of which were crude oil and 52,700 barrels-condensate.

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Gasoline stocks rose by 1.6 million barrels, compared with analyst expectations in a Reuters poll for a 1.1 million-barrel gain.

Oil exchange traded products, including the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, could be primed for more upside after finishing the third quarter on strong notes. Total volume traded was about 14% below the 100-day average.

“Anything above $60 a barrel is going to be a massive incentive for USA shale to ramp up production, ” said Chris Bake, a senior executive at Vitol.

By 4:40pm EST, WTI was trading down a bit after the data, at $50.38 with Brent Crude trading at $55.91. US crude oil more often than not falls in the final three months of the year, according to a study performed by CNBC using hedge fund analytics tool Kensho. A stronger US currency reduces the appeal of dollar-denominated raw materials as an investment.

Nigeria was shielded from output freeze due to the instability in the country's crude oil production.

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