Sun, Dec 27, 2015 page15

• Oil caps big weekly gain as US inventories decline

  • Bloomberg
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  Oil in New York capped the biggest weekly gain in four months after US crude inventories declined and drillers idled rigs.

  West Texas Intermediate (WTI) futures rose 9.7 percent this week, the biggest gain since August. Supplies fell by 5.88 million barrels last week, the largest loss since June, government data showed on Wednesday. The number of active oil rigs in the US fell by 3 to 538 this week, according to Baker Hughes Inc. Trading ended early on Thursday because of the Christmas holiday.

  The world remains awash with oil. The global glut that has sent WTI toward its second yearly decline may deepen after OPEC effectively abandoned output limits earlier this month, according to KBC Energy Economics.

  Brent, the benchmark for more than half the world’s crude, is poised to end the year with the lowest annual average price in 11 years, hurting oil-exporting countries and companies.

  “There are traders covering shorts going into the long holiday weekend after the long decline,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.

  WTI for February delivery rose US$0.60, or 1.6 percent, to close at US$38.10 a barrel on the New York Mercantile Exchange. It was the highest settlement since Dec. 4. Futures touched US$33.98 on Monday, the lowest since February 2009. The volume of all futures trading was 51 percent below the 100-day average at 1:35pm.

  Brent for February settlement advanced US$0.53, or 1.4 percent, to end the session at US$37.89 a barrel on the London- based ICE Futures Europe exchange. The European benchmark crude closed at a US$0.21 discount to WTI on ICE, after falling from a premium following the decision to end a ban on most US oil exports.

  Following the ban’s removal last week, Enterprise Products Partners LP said it would load 600,000 barrels of US crude onto a tanker in the Houston Ship Channel in the first week of next month.

  Trader Vitol Group will probably send the cargo to Europe, according to two people familiar with the transaction.

  “The rise in prices is a short-term reaction to the large draw from US inventories,” Ehsan Ul-Haq, a senior analyst at KBC Energy, said by phone from London. “This doesn’t take away from the fact that global supplies continue to remain very high and US stockpiles are still higher than normal and prices will remain under pressure for a few more months at least.”

  Nationwide crude stockpiles fell to 484.8 million barrels in the week ended Dec. 18, according to the Energy Information Administration.

  Gulf Coast refiners typically curb deliveries at the end of the year to reduce local taxes. Supplies are more than 120 million barrels above the five-year seasonal average.

  Iran plans to boost output by about 500,000 barrels a day within weeks of international sanctions being lifted next year, and eventually add about 1 million barrels a day of supplies, Iranian Oil Minister Bijan Namdar Zanganeh said last month.

  “When we come back from the holiday’s we’ll be keeping an eye on the lifting of the Iranian export restrictions and what that will mean for supply,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “The return of the Iranian shipments will be the major fundamental story of the first quarter.”
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