"The lower draw in crude oil stocks, combined with the strong builds in product stocks is bearish news for prices".
Crude oil prices jumped on Wednesday and settled near three-year highs after US government data showed a drop in crude inventories and production, even as fuel inventories rose.
EIA forecasts the West Texas Intermediate (WTI) crude oil spot price will average $55/b in 2018 and $57/b in 2019. Analysts had expected a smaller, 2.625-million-barrel build.
Oil prices posted gains in all the four past sessions this week.More news: Western New Yorkers react to Haiti comments
"Inventories ended 2017 9.3 percent above the five-year average, a stark contrast to the 35.6 percent surplus seen at the end of 2016", Oil Futures Editor Geoffrey Craig said in a statement emailed to UPI.
Oil producers may be enjoying oil prices at $65 to $70, but these price levels are likely to encourage even more oversupply from USA shale, Fatih Birol, the Executive Director of the International Energy Agency (IEA), said at an industry event on Friday. Oil traders have closely watched US crude production to see whether output gains from USA shale formations will surpass the 1.8 million bpd cuts.
Oil markets have generally been supported by a production cut led by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation that started in January previous year and is set to last through 2018. OPEC in December, however, produced about 50,000 barrels per day more than in November.
But Fatih Birol, head of the International Energy Agency, warned on Friday that while oil prices at $65 to $70 per barrel are good for oil producers now, there is a risk that such a level would encourage more oversupply from US shale drillers. Prices have also been supported by concerns that supply disruptions could stem from rising political tensions in OPEC members Iran and Venezuela.More news: Fit for Manchester City clash
The market was bolstered modestly by data showing a sharp decline in USA production last week.
Rising prices are putting USA production on track to rival both Saudi Arabia and Russian Federation, with output likely to exceed 10 million barrels a day as soon as next month and top 11 million before the end of 2019, according to Energy Information Administration forecasts.
Ole Hanson, the head of commodity strategy at Saxo Bank, told UPI momentum is carrying the narrative.More news: Department Of Education Finds Texas Violated Special Education Law