Crude Oil Prices Settle Higher as Production, Supplies Fall

Investing.com – Crude oil prices settled higher on Wednesday as traders cheered an unexpected drop in US production while data showing crude stockpiles fell for the eighth-straight week lifted sentiment.

On the New York Mercantile Exchange for January delivery rose 0.97% to settle at $63.57 a barrel, while on London’s Intercontinental Exchange, gained 0.44% to trade at $69.12 a barrel.

Crude oil prices continued their bullish start to the week as traders cheered signs of ongoing tightening in domestic crude oil supplies which offset a larger-than-expected build in both gasoline and distillate stockpiles.

Inventories of U.S. crude fell by roughly 4.95 million barrels for the week ended Jan. 5, beating expectations for of 3.44 million barrels.

Gasoline inventories – one of the products that crude is refined into – by 4.14 million barrels, well above expectations for a rise of 2.62 million barrels, while supplies of distillate – the class of fuels that includes diesel and – by 4.3 million barrels, confounding expectations for a rise of just 1.46 million barrels.

For tax purposes refiners tend to ramp up activity at the end of the year burning through crude supplies but this activity traditionally slows down in January, supporting a build in product inventories.

Investor fears of rising US production capped upside momentum, however, despite data showing U.S. output fell by nearly 300,000 barrels a day to 9.49 million barrels a day (bpd). Production is expected to hit 10 million bpd next month as rising oil prices attract US shale producers to ramp up output.

Goldman Sachs said it expects the rally in oil prices to meet a ceiling around $70 per barrel as the “new oil order” of shale producers is well underway. Shale producers’ are enjoying significant gains as costs average about $50 to $55 per barrel, the bank added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.