Expect crude oil to trade positive: Sushil Finance

EIA chart changes in gasoline prices after hurricane landfall

Expect crude oil to trade positive: Sushil Finance

"The news was taken as confirmation of the prevalent supply tightening narrative, i.e. that the oil surplus is slowly disappearing", said Norbert Rucker, head of macro and commodity research at Julius Baer.

And while Brent's significant premium over the US benchmark informs analysts that the USA crude market needs more time to return to normal in the wake of Hurricane Harvey, they were mainly buoyed by news from the International Energy Agency that global oil demand is set to accelerate faster than anticipated this year.

"We believe that Irma will have a negative impact on oil demand but not on oil production or processing", the analysts said.

"The American Petroleum Institute said that crude stockpiles in the United States increased by 6.2 million barrels in the week ending 8 September to 468.8 million". EIA inventory data, meanwhile, is likely to show a huge build in crude oil stockpiles as USA refinery outages from Hurricane Harvey leave oil locked in storage.

In December 2016, OPEC and 11 countries outside the cartel agreed to withdraw 1.8 million barrels per day from the oil market in the first half of 2017.

Robust demand in industrialised countries was a key factor behind global demand growing by 2.3 million bpd in the second quarter, the highest quarterly year-on-year increase since mid-2015. The IEA sees global oil demand rising this year by the most since 2015, while OPEC boosted projections for consumption in Europe and China.

USA crude production rebounded to an average of 9.4 million barrels per day last week from 8.8 million bpd a week earlier, entirely the result of increases in the lower 48 states.

The prominent financial institution, Goldman Sachs also warned that the oil demand may dwindle down and fall to an expected 900,000 barrels per day by September and a whopping 300,000 barrels per day in October after the continued Hurricane attacks.

The Paris-based IEA, in its monthly report, noted that the U.S.' reliance on the Gulf Coast makes it vulnerable to similar events like Harvey, saying "normal operations are too important to fail". This will support efforts by Opec countries and other producers including Russian Federation, that have combined forces to curb global supplies by around 1.8m b/d to ease inflated oil stockpiles and boost prices.

Crude palm oil prices advanced by 0.53 per cent to Rs 550 per 10 kg in futures trading today driven by strong demand in spot markets.

The US EIA on Tuesday revised its 2017 and 2018 US output forecasts lower to reflect, in part, the effects of Harvey.

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