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Oil Rises on Signs of U.S. Supply Drop, OPEC’s Shale Outlook


By Elizabeth Low and Grant Smith

(Bloomberg)Oil rose for a second day after an industry report pointed to a drop in U.S. inventories, and as OPEC said it sees potential for a “sharp” slowdown in American shale output next year.

Futures added 1.1% in New York. Expectations that the U.S. government will report that crude inventories increased last week eased after data from the American Petroleum Institute, an industry body, signaled that stockpiles fell by 541,000 barrels. Meanwhile, OPEC Secretary-General Mohammad Barkindo said there will likely be downward revisions to U.S. shale output going into 2020.

WTI has been testing its 200-day moving average

“Today, the market will focus on the release of official U.S. oil statistics by the Energy Information Administration,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “As usual, the mood ahead of the EIA release is being set by the preliminary numbers released by the API the day before.”

OPEC’s prediction comes after major American shale producers including Pioneer Natural Resources Co. warned that the shale boom is ending, although the EIA increased its production forecast for next year on Wednesday. The Organization of Petroleum Exporting Countries also said it sees a possible upswing in demand, especially if the U.S. and China reach a preliminary trade deal.

See also: U.S. Boosts Oil-Output Forecast While Industry Warns of Slowdown

West Texas Intermediate for December delivery rose 58 cents, or 1%, to $57.70 a barrel on the New York Mercantile Exchange as of 10:32 a.m. in London. It settled 32 cents higher at $57.12 on Wednesday.

Brent for January rose 68 cents, or 1.1%, to $63.05 a barrel on the London-based ICE Futures Europe Exchange after advancing 0.5% on Wednesday. The global benchmark crude traded at a $5.22 premium to WTI for the same month.

The drop in crude inventories reported by the API compares with expectations in a Bloomberg survey ahead of the EIA data for an increase of 1.5 million barrels. The EIA report is due later on Thursday.

Other oil-market news
  • U.S. oil output will fail to meet the latest growth predictions made by the International Energy Agency as producers cut back on spending to improve their stock prices, according to one of the most prominent executives in the U.S. shale sector.
  • Qatar Petroleum is set to join most of its Persian Gulf counterparts and price its crude before loading instead of afterward from next year, according to people familiar with the plans.
  • Abu Dhabi’s state oil giant is looking to invest in refining and petrochemicals projects in China, Abdulaziz Al Hajri, Adnoc’s executive director for downstream, said.
  • India plans to reduce its stake in Indian Oil Corp. to below 51% while ensuring the government and state-run companies retain control of the nation’s largest oil refiner.


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