As most of the U.S. has been struggling to stay warm with these near or below freezing temperatures, and snow accumulating in places it hasn’t in years, the weather seems to be here to stay for a while just like rising prices in the oil market. How long will these prices sustain? Oil prices struggle to remain positive this Thursday morning amid reports that domestic crude supplies fell for a ninth week in a row, meanwhile crude production has increased. The EIA (Energy Information Administration) reported that crude supplies dropped 6.9 million barrels in the week of January 12th which was more of a drop off than analysts’ previously anticipated 3.5 million barrels. Refinery runs also declined by 448,000 bpd (barrels per day) while distillate stockpiles (diesel and heating oil) plunged 3.9 million barrels combating an 86,000-barrel rise, which was previously expected. On a more positive note, gasoline stocks rose by 3.6 million barrels and net U.S. imports rose by 58,000 bdp. On the New York Mercantile Exchange February WTI is down .06% to $63.93 a barrel, while Feb RBOB has climbed 1.04% to $1.8774 a gallon and lastly Heating Oil fell 0.65% to $2.0566 a gallon.
Though U.S. stocks have fallen throughout the last couple months, the higher prices in the market are reflective that OPEC's plan to erode inventory stockpiles worldwide through production cuts has been achieving its goal. However with prices being lifted to three year highs, the concern has arisen that competition in the U.S. may feel confident to keep expanding production. The Organization of Petroleum Exporting Countries have revised its expected growth forecasts for 2018 non-OPEC countries from 160,000 bpd to 1.15 million bpd and U.S. crude supplies from 110,000 bdp to 820,000 a day. OPEC and its counterparts including Russia, will meet in Oman this weekend to review their strategies for clearing the global supply glut. As ususal we will await the outcome from this meeting and see if the cartel will stick with their plan to curb output for the remainder of the year.