Oil tries again to rally

NEW YORK, Jan. 13 (UPI) -- A pull on U.S. crude oil inventories reflected some short-term balance in supply and demand, giving crude oil prices a shot at a rally in Wednesday trading.

Crude oil prices started Tuesday stronger on speculation that members of the Organization of Petroleum Exporting Countries were considering an extraordinary meeting to review the steep market decline. The rally fizzled, however, during late trading when key indices moved at one point below $30 per barrel before settling back at $30.44 to close for West Texas Intermediate.

Oil prices are off about 70 percent from mid-2014 and down close to 10 percent for the year. U.S. crude oil production levels continue to hold, though market pressures may push output there lower. The glut of oil on the market, coupled with weak economic recovery, has put negative pressure on crude oil prices.

Data from the American Petroleum Institute show U.S. crude oil inventories declined by 3.9 million barrels in a sign that some demand was resurfacing.

Brent crude oil gained 1.8 percent to start the day Wednesday in New York at $31.42 per barrel. WTI, the U.S. benchmark price, gained 2.3 percent to $31.16 per barrel.

In its short-term market report, the U.S. Energy Information Administration reported supply side pressures could ease as the estimated total U.S. crude oil production is expected to fall 7 percent from 2015 levels to 8.7 million barrels per day and another 2 percent in 2017 for an expected average of 8.5 million bpd.

EIA estimates total U.S. crude oil production in December fell 80,000 bpd from November.

Wednesday's rally may be a sign of overconfidence given recent pessimistic forecasts for oil prices. EIA lent its voice to the chorus expecting a lower-for-longer scenario.

EIA sees Brent only reaching $50 per barrel by 2017, with WTI trading $3 per barrel below the global benchmark.