Dec. 29 (UPI) -- U.S. data showing the surplus on the five-year average in crude oil stocks at just 9 percent helped drive oil prices higher on the last trading day of 2017.
Data from the U.S. Energy Information Administration showed crude oil stockpiles dropped 4.6 million barrels for the week ending Dec. 22. The American Petroleum Institute estimated a drop of 6 million barrels, while analysts surveyed by commodity pricing group S&P Global Platts were looking for a drain of about 3.5 million barrels.
The variance led to some volatility in trading in the previous session. Still, though, Geoffrey Craig, the oil futures editor at Platts, said there's only a 9 percent surplus on the five-year average, and that's down from the 25 percent overhang from September.
"Compared with a year ago, crude stocks have fallen by 55.223 million barrels, and now sit at their lowest level since October 2015," he said in emailed comments.
Traders are keeping close tabs on balance as a heavily oversupplied market last year helped push crude oil prices below $30 per barrel. Brent crude oil, the global benchmark for the price of oil, was up 0.48 percent to $66.48 per barrel as of 9:13 a.m. EST. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.5 percent to $60.14 per barrel.
Craig added that inventories are lower even as U.S. oil production continues to break records. The average of 9.75 million barrels per day last week, however, was down 35,000 barrels per day from the previous week.
Higher crude oil prices this year lead to a dramatic revival for U.S. shale oil operators. A December survey from the Federal Reserve Bank of Dallas showed an index measuring confidence had its first sign of reduced uncertainty since the first quarter of 2017. Most of that optimism came from drilling services companies, those that were hit hard by the market downturn in early 2016.
Rig counts, which serve as a loose gauge of confidence in the exploration and production sector, are up 47 percent from last year in Texas. Just over half, 51 percent, of the respondents told the Dallas Fed they expected the rig count to be higher than it is right now in six months and $60 for WTI was needed for bigger numbers next year.
Energy executives surveyed by the Dallas Fed said they expected WTI to be around $58.98 per barrel by the end of 2018 on average.
Looking into next year, Craig said U.S. crude oil may be the bellwether as it displaces other barrels moving into its third year on the open market. That's competing against an effort by the Organization of Petroleum Exporting Countries to drain the surplus with coordinated production cuts.
"But the situation could change in 2018," he said. "Not only is the Forties pipeline expected to return to normal rates around the New Year, but some analysts believe compliance with the OPEC-led pact could begin to slip."
The Forties pipeline system in the North Sea, which carries about 40 percent of its output, closed earlier this month after operator Ineos discovered a crack on inland infrastructure. The crack is repaired and supplies are moving through the system already at a reduced rate.
Brent started 2017 at $55 per barrel. WTI opened near $53 per barrel.