Oil Rallies as Stockpile Surprise Brings Relief From Global Rout

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The main range is $56.07 to $66.66.

Crude imports fell by 538,000 bpd to 7.89 million bpd for the week ending February 2, and commercial crude stocks slightly rose 1.9 million bpd to 420.3 million, the EIA data said. Gasoline inventories dropped by 227,000 barrels and distillate stockpiles jumped by about 4.55 million barrels. Late Tuesday, the American Petroleum Institute, an industry group, reported that stockpiles fell by 1.1 million barrels. "They tend to increase imports in the first two months of the year, and some new players got quotas", said Sengyick Tee, senior director SIA Energy. The EIA said this year the USA will produce an average of 10.6 million bpd, rising to 11.2 million bpd next year.

EIA expects West Texas Intermediate (WTI) crude oil prices to average $4/bbl lower than Brent prices in both 2018 and 2019.

OPEC and its partners made a decision to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

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. Output has declined from 3.07 million at the end of 2016 as OPEC and allies cut production to reduce a global glut and prop up prices.

Not only did global prices touch $70 United States a barrel last month for the first time in three years, but the oil glut that led to the 2014 price collapse is largely gone.

The United States has been a net energy importer since 1953, but in its in annual energy outlook released on Tuesday, the EIA projects the USA will become a net energy exporter as early as 2022. Analysts had expected a build of 3 million barrels in crude oil inventories.

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On Thursday, OPEC member Iran announced plans to boost production within the next four years by at least 700,000 barrels a day. Total OPEC production in January was around 32.5 million barrels per day, below its ceiling of around 32.7 million barrels per day. Refineries were running at 92.5% of capacity, with daily input averaging 16.8 million barrels a day, about 784,000 more than the previous week's average.

China has granted crude oil import licenses to independent refineries in the country's northeast since 2015. The difference between the high and low for the Dow on Tuesday was more than 1,100 points.

The key driver for the price decline was news from the United States.

Pressure could continue today if the dollar rises and the stock market continues to sell-off.

Energy stocks climbed 3.8 per cent in January before stumbling almost 6 per cent this week as part of a broad market selloff.

Chevron Corp. (NYSE: CVX) traded up about 0.3%, at $117.53 in a 52-week range of $102.55 to $133.88.

Based on the current price action, the direction of the market the rest of the session will be determined by trader reaction to the steep downtrending Gann angle at $62.16.