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Oil prices steady amid signals of higher demand

10 February 2017 13:22 (UTC+04:00)
Oil prices steady amid signals of higher demand

By Nigar Abbasova

Crude prices were steady on February 10 supported by OPEC-led productions cuts, as well as signals of higher demand in the world's biggest markets, while soaring U.S. fuel inventories still challenge the hopes for re-balancing.

Brent crude futures were trading at $55.68 per barrel up 5 cents from their previous close, while U.S. West Texas Intermediate (WTI) futures stood at $53.07 a barrel, recording an increase of 7 cents, Reuters reported.

Strong Chinese crude import, which rose 27.5 percent in January, supported the prices. The country imported 34.03 million tons, or 8.01 million bpd, according to the General Administration of Customs.

China met almost 65 percent of its crude demand by means of imports last year, due to high costs of domestic production, as well as favorable international prices resulting from the global oversupply.

An unexpected drop in U.S. gasoline inventories also pointed to higher demand, suggesting that consumption may be strong enough to support prices at a time when there is a glut in reserves.

The U.S. Energy Information Administration (EIA) said gasoline inventories fell by 869,000 barrels last week to 256.2 million barrels, while expectations were for a 1.1 million-barrel increase.

Despite being an important influencing factor, drop in gasoline was insufficient to bring serious gains as two competing driving forces of production cuts and rising U.S. crude stockpiles are still dominating.

Despite the initial skepticism that all producers would actually stay committed to their pledges, the compliance is now estimated at a range of some 80 and 90 percent. However, high oil inventories are undermining efforts of producers to tighten the market and prop up prices.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

Follow us on Twitter @AzerNewsAz

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