U.S. 2016: OIL SURGE AFTER GAS RALLY

U.S. 2016: OIL SURGE AFTER GAS RALLY

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U.S. 2016: OIL SURGE AFTER GAS RALLY

– Rally in Gasoline Market Boost Crude Oil

– As Supplies Tighten, More Highs May Be Recorded

U.S. 2016: OIL SURGE AFTER GAS RALLY

U.S. 2016: OIL SURGE AFTER GAS RALLY
Oil Ridge

On Tuesday, prices of crude oil heaved on the basis of a rally in the gasoline market. This was also backed by a report of an industry group of a surprise in U.S. stocks.

Riding on the coattails of a gasoline rally that forced August surge after a succession of refinery rambles, Brent and U.S. crude West Texas Intermediate (WTI) futures finished regular trading about 3% higher.

During post-settlement trade, both standards ascended more than 4% after the American Petroleum Institute recounted a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week against a 2.4 million-barrel build projected by analysts in a poll by Reuters.

From the U.S. Energy Information Administration, the API report is a pointing herald to official inventory documents due on Wednesday.

U.S. 2016: OIL SURGE AFTER GAS RALLY
John Kilduff

“There’s a possibility we could see newer highs from here, notwithstanding the EIA data, as the market is really fired up on the idea of tightening supplies.” John Kilduff, partner at New York Energy Hedge Fund said.

According to Reuters, Brent crude futures finished up $1.26 at $45.74 a barrel. In post-settlement trade, it rose from as much as $2.01 to a 2016 high of $46.49.

U.S. crude futures settled up $1.40 at $44.04. It gained $2.19 in after-hours trade to reach a year-to-date peak of $44.83.

U.S. 2016: OIL SURGE AFTER GAS RALLY

Crude markets yielded to a stimulating start in the New York session as gasoline futures and gasoline refinery margins both surged from refinery outages. Simultaneously, Venezuela kept buying and there was a reported drop in New York inventories.

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“I think the market has become more optimistic on oil products.” Scott Shelton, broker and commodities specialist with ICAP in Durham, North California, said. “If refining margins stay strong, crude runs will be quite high and that will make the odds of a crude stock draws increase significantly.”

With Brent aimed at finishing April 17% higher for its best month gain in a year, oil prices are directed for a fourth consecutive week of gains. This is so despite aborted plans by key producers to decide on an output embargo at a meeting in Qatar earlier this month.

“Tuesday’s oil rally was also underpinned by a weaker dollar, which fell on expectations that the U.S. Federal Reserve’s Federal Open Market Committee (FOMC) will keep interest rates at existing levels. The dollar rallied earlier this year, weighing on oil, as investors braced for higher rates.” Reuters indicates.

“For now, the line of least price resistance remains to the upside, and we will be reassessing this view in light of tomorrow’s FOMC statement.” Jim Ritterbusch of Chicago-based oil market consultancy Ritterbusch & Associates said.

U.S. 2016: OIL SURGE AFTER GAS RALLY