Advertisement

Oil prices extend rally after ECB rate stand-still

A market snapshot from this week said consumption levels could be lower next year.

By Daniel J. Graeber
Oil prices extend rally after ECB rate stand-still
Crude oil prices extend rally after European Central Bank stands pat on interest rates. Photo by Monika Graff/UPI | License Photo

NEW YORK, Sept. 8 (UPI) -- Oil prices, already rising in response to a decline in U.S. production estimates, rallied further on Thursday after the European Central Bank stood still.

"Our comprehensive policy measures continue to ensure supportive financing conditions and underpin the momentum of the euro area economic recovery," policy makers at the ECB said in their prepared remarks. "As a result, we continue to expect real gross domestic product to grow at a moderate but steady pace and euro area inflation to rise gradually over the coming months."

Advertisement

The remarks are a sign the European economy is less concerned about the risks from the British referendum in June to leave the European Union. As recently as July, ECB President Mario Draghi said risks to the European economy "remain tilted to the downside."

Rates were left unchanged Thursday by the ECB.

Crude oil prices were already on the rise in overnight trading and continued the surge early Thursday. The price for Brent crude oil was up 1.5 percent to open in New York at $48.72 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, gained 1.8 percent from the previous close to start the day at $46.33 per barrel.

Advertisement

A short-term market report from the U.S. Energy Information Administration pulled oil prices higher mid-day Wednesday after it found total production from outside the Organization of Petroleum Exporting Countries is expected to decline by 400,000 barrels per day this year and another 200,000 bpd next year.

"Changes in non-OPEC production are significantly affected by changes in U.S. tight oil production, which has high decline rates for production and relatively short investment horizons, making it among the most price-sensitive oil-producing areas," the report read.

An excess in supplies against a backdrop of slow global economic growth in part helped pull oil prices down from the $100 range in 2014. In EIA's short-term market report from earlier this week, global consumption rates next year are expected to be lower than for 2016.

Oil prices will be influenced later in the trading day after EIA releases weekly figures on production and storage levels. A preview from S&P Global Platts said data may show a draw of 625,000 barrels, "which if confirmed, will make a minor dent in the surplus."

Latest Headlines

Advertisement
Advertisement

Follow Us

Advertisement