Oct. 18 (UPI) -- Short-term market metrics lingering from a U.S. hurricane gave support to crude oil prices Wednesday, even though balance seemed slow to emerge.
The American Petroleum Institute reported late Tuesday that crude oil inventories in the United States moved lower last week by 7.1 million barrels. The API report was far more bullish than the 3.9 million barrel draw reported in an analyst survey earlier in the week by commodity pricing group S&P Global Platts.
Crude oil inventories matter for traders watching the supply-side pressures that pushed oil prices below $30 per barrel last year fade away. The drain on the surplus of the five-year average in global crude oil inventories is supported by a production ceiling steered by the Organization of Petroleum Exporting Countries.
API's bullish report on crude oil inventories was muted by an increase in gasoline supply. Geopolitical tensions triggered by skirmishes in northern Iraq supported the rally, though the risk premium waned with few indications of long-term oil production and delivery problems.
Data from API is likely influenced by production idled in the Gulf of Mexico by recent hurricanes. About 30 percent of Gulf of Mexico production was shut down because of Hurricane Nate last week.
The discount for WTI makes U.S. crude oil competitive in some Asian markets. Continental Resources said it sold 1 million barrels of oil from its Bakken shale basin in North Dakota to a trading company that would take it from the storage hub in Cushing, Okla., to southern ports for intended delivery to China. Harold Hamm, the company's CEO, said the sale represented the "new normal" and argued WTI should be priced closer to Brent now that more U.S. oil was on the export market.
Bank of America-Merrill Lynch said last week the spread, or difference, between WTI and Brent, the global benchmark, is what made U.S. crude oil competitive.
On the issue of balance, Total CEO Patrick Pouyanne said Wednesday at an oil and financial conference in London that the OPEC balancing effort was working well, as evidenced by the steady draw on global crude oil inventories. Balance is coming, but it's coming slowly, he said.
"If you have three or four years of oversupply, it takes time to rebalance the market," he was quoted by Platts as saying.
Formal U.S. data from the U.S. Energy Information Administration are published late in the trading morning Wednesday and the figures will influence the direction of crude oil prices. Apart from inventory levels, traders will look at U.S. export and production figures to get an indication of the move toward a balanced market.