United States oil falls for sixth day as supply fears mount

An oil well owned and operated by Apache Corporation in the Permian Basin of Garden City Texas

Oil has been caught in the middle of two contradicting influences, the 1.8 million barrels per day (bpd) cut in supply by the Organization of the Petroleum Exporting Countries and Russian Federation, and the increase in USA crude output surpassing 10 million bpd.

If production restraint succeeds in drawing down global inventories even further, and pushes Brent significantly above $70 per barrel, the resulting shale surge and slowdown in consumption growth will intensify the danger.

Distillate inventories, which include heating oil and diesel fuel, were seen down 1.4 million barrels last week, the poll showed.

USA gasoline and distillate stocks also saw a build of 3.414 million barrels and 3.926 million barrels to 245.474 million barrels and 141.826 million barrels, respectively.

Standard Chartered Bank says they expect global oil demand growth for 2018 to be more than 1.6 million barrels a day. Total volume traded was about 11% above the 100-day average.

Oil has dropped below $65 per barrel to its lowest price of 2018 as the USA pumps out record amounts of crude. The contract fell 76 cents to $63.39 on Tuesday.

On the charts, WTI crude has been in an uptrend since March 2016, when it broke out of its long-term bearish channel at $38 per barrel.

Brent prices the next year are expected to average $61.51/bbl.

Oil price continued its fall for a fifth day as surging USA output and a rising dollar sent crude to its biggest drop in two months.

Only Russia produces more, averaging 10.98 million bpd in 2017. According to the EIA, 56 percent of China's crude oil imports came from OPEC members past year, compared to a peak of 67 percent in 2012.

In November, oil production surpassed 10 million bpd for the first time since 1970, and neared the all-time output record. Exports of refined products fell by 449,000 barrels a day last week to 4.44 million. A rising dollar will pressure the dollar-denominated commodity because it tends to decrease foreign demand.

Exxon Mobil (XOM) shares were flat in the stock market today. Over the past 12 months, Exxon stock has traded down about 3.5%. Chevron (CVX) rose 0.4%, Royal Dutch Shell (RDSA) eased 0.5%, and BP (BP) lost 0.2%. This is 1.74% below the closing level of the previous trading session.

Crude volatility continued higher, with the Cboe/Nymex Oil Volatility Index rising 6.2% on Tuesday after its biggest one-day gain since December at the start of this week. The 52-week range is $8.65 to $13.30. The U.S. also made it once into China's top ten suppliers list past year - in October - when it was ninth in terms of crude oil sales to China.

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