Crude oil prices steady as market begins to tighten

Oil prices steadied yesterday after US crude oil stocks rose, balancing bullish data showing the market was beginning to tighten, with falling supply and higher demand.

The US government’s Energy Information Administration (EIA) said in a monthly report global oil demand should increase by its fastest rate in six years in 2016, suggesting a surplus of crude is easing more quickly than expected.

Global benchmark Brent crude oil has dropped to around $50 from a high above $115 a barrel in June 2014 and many oil companies are losing money with oil prices so low.

Brent rose $1.23 a barrel to a high of $53.15 yesterday before falling back to trade around $52.20. It jumped as much as $3 on Tuesday to close above $50 for the first time in a month.

US light crude was up 5 cents at $48.58 after an earlier high for the day of $49.71.

The EIA said US crude inventories rose by 3.1 million barrels in the last week, compared with analysts’ expectations of 2.2m barrels.

“This week’s EIA (stocks) data was bearish with oil and product inventories increasing more than expected even with refinery utilisation dropping for maintenance season,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.

But overall the trend was still upwards, analysts said.