US Crude Oil Inventories Have Fallen ~10.6% in 2017

US Crude Oil Inventories Have Fallen ~10.6% in 2017

Oil bulls are charging into the new year with unprecedented vigor, and the credit goes to OPEC.

Craig added that inventories are lower even as US oil production continues to break records. Eventually, I believe that we will go looking towards the $62.50 level, and if tensions in the middle east rise between Iran and Saudi Arabia, that could be another catalyst to push the oil markets higher.

WTI crude oil prices rose by 66 cents per barrel and reached $57.87.

Refiners have profited in recent months as the spread widened between U.S. crude and Brent futures prices.

The last week of the year saw futures trading above $60/bbl in NY and $67 in London for the first time since mid-2015, after the two most important oil benchmarks surged more than 40% from their doldrums in June.

Crude oil were lower on Friday as expectations OPEC and other producers will extend their production cut agreement were offset by forecasts US output will continue to grow with prices holding near 28-month highs.

Trading was typically thin at the end of the year, with many traders still on holidays. "We kind of need the supply", Mr. Cooper said. Gasoline futures settled up 0.3% at $1.7992 a gallon.

Hedge funds boosted their Brent net-long position - the difference between bets on a rally and wagers on a decline - to an all-time high on December 12 and have kept it near that level. "The expectation is the much colder than normal weather should spur demand". Even with shipping costs factored in, around $40 a barrel for American oil was too good a deal for many overseas buyers to pass up.

Net bullish bets by speculative investors remain near all-time highs, which could compound a selloff if the oil market turns, analysts said. The EIA anticipates that US output will average 10 million barrels a day next year - besting the record of 9.6 million barrels a day set in 1970.

Based on total expected quotas, China's imports-which at around 8.5 million bpd are already the world's biggest-are expected to hit another record in 2018 as new refining capacity is brought on stream and Beijing allows more independent refiners to import crude.

"We've seen quite a bit of hedging activity in last 30 days", Mr. Kung said.

More U.S. producers have begun selling to China in earnest.

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