"We should expect the WTI whipsaw to continue as debate rages between USA shale and OPEC, but we're starting to carve out near-term ranges, as longer-term oil bulls remain in dip buying mode, with shale oil hedger looking to sell upticks", he said. The IEA expects United States crude output to reach 11 million bpd in 2018. Traders are already concerned about what will happen during the NY session after Walmart shares plummeted more than 6 percent in pre-market trade on weak profits.
No other news agency and virtually no analysts have yet come forth to discuss the implications of a chief OPEC member and its top ally admitting that a preferred way of determining crude stockpile number s is deeply flawed, and this left the field open for the ever-optimistic Emmanuel Ibe Kachikwu, oil minister for Nigeria (one of many countries attempting to boost rather than reduce production), to tell media that he is "not ruffled" by the recent oil price decline and OPEC member nations need to focus on their production costs. The US housing starts spiked by 9.7% to an annual rate of 1.326 million in January. The EIA now projects USA production to touch 10.6 mbpd this year and 11.2 mbpd in 2019.
The steep drawdown in U.S. inventories in January provided a lift to WTI at the start of this year.
"This has left stocks in the hub below the five-year average for this time of year", said Warren Patterson at ING.
Oil prices were lower on Tuesday afternoon, weighed by profit taking and a marginally stronger dollar.
Over the medium term, WTI oil prices will see a base forming around $55 as output cuts by the OPEC may extend beyond 2018.
Gold last Wednesday enjoyed its best trading day since June 24, 2016 when financial markets were shocked by Britain voting to leave the European Union. Estimates suggest that OPEC oil output was largely unchanged at 32.5 mbpd in January and overall compliance touched 138 per cent. Fuel prices jumped the most on the back of higher oil prices, though federal data show prices for non-fuel imports increased 0.4 percent in January, after posting a decline of 0.1 percent the previous month.
That was largely due to soaring USA crude production, which has jumped by over 20pc since mid-2016 to more than 10m bpd, surpassing that of top exporter Saudi Arabia and coming within reach of Russian Federation, the world's biggest producer. Technically, on the MCX, the current upside momentum for oil prices could initially continue towards resistance at Rs 4,090-4,120 zone looking possible.