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US Crude Oil Inventories Hit Record Last Week

US Crude Oil Inventories Hit Record Last Week

USA crude-oil inventories have climbed to their highest weekly level on record, the Energy Information Administration said yesterday.

The Energy Information Administration (EIA) reported an increase of 9.5 million barrels in commercial crude oil inventories for the third week in a row, fixing an increase to a total of 518.1 million barrels, the index which exceeds the seasonal limit. It represents less than 2 percent of the strategic reserve's current capacity, which is calculated at 695.1 million barrels.

Despite the bearish US crude inventories report, crude oil prices remain rangebound.

Brent crude futures, the global benchmark for oil prices, were trading at $55.76 per barrel at 0112 GMT, up 17 cents from their last close. The market has largely priced in these production cuts OPEC and other producers agreed to in November, said Tariq Zahir, managing member of Tyche Capital in NY.

"This optimism is certainly going to skew future expectations, however".

Mohammad Sanusi Barkindo said Opec had been compelled to introduce the quotas after sustained low oil prices led to investment being slashed and exploration falling away.

Oil prices dipped on Wednesday over concerns that OPEC producers would not be able to maintain their high compliance so far with output cuts aimed at reining in a global fuel supply overhang.

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Since mid-2016, U.S. crude oil production has increased by 6.5% to 8.98 million bpd.

An S&P Global Platts analysis of OPEC output in January, the first month of the six-month deal, found 91 percent compliance with the required cuts - not ideal, but above expectations.

Speculators have accumulated an aggressively bullish stance toward NYMEX crude futures. United States crude fell 39 cents to $52.81. The two highest-volume trading days of 2017 occurred when US crude rebounded from lows around $51 a barrel as buyers came into the market.

At the start of February, speculators were betting a net 865 MMbo across the market's two global benchmarks that prices would rise. The buying pressure on NYMEX crude put options has gone up, which in turn has caused implied volatility to increase, he said. Open interest data is delayed on day. Gasoline and diesel stockpiles also rose, the API's weekly report said.

Supplies at the Cushing, Oklahoma, facility fell this week by 1.27 million barrels, contradicting analyst expectations that this week would see a build at the Cushing facility of 500,000 barrels.

USO holds about 2 percent of open interest in all NYMEX WTI contracts, but the share is smaller if ICE contracts are also included.

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