Oil Rally Slows On Surprise Crude Build

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Oil rose near $70 a barrel in London, a level last breached in November, as global crude supplies tightened while hopes for an end to the US-China trade impasse lifted financial markets. "That is taking a lot of oil away from the market".

Oil prices are being supported by USA sanctions on Iran and Venezuela along with voluntary supply cuts by the organization of the petroleum exporting countries and other major producers.

Unsurprisingly, Ted Seifried, chief market strategist at Zaner AG Hedge, told Bloomberg television that declining USA rig counts and output, ongoing cuts by the Organization of the Petroleum Exporting Countries (OPEC), and other factors mean "there is room to run" with regards to crude prices: "I wonder if we're going to sniff out that $70 level".

Despite the sharp increase in USA crude inventories, market participants said prices were positioned to move up on tightening global supply and signs of demand picking up.

The EIA also said gasoline inventories had shed 1.8 million barrels in the seven days to March 29, versus a decline of 2.9 million barrels in the prior week.

March's output is the lowest by OPEC since February 2015, excluding membership changes since then, Reuters surveys showed.

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Crude oil is trading above its 20 Hr and 50 Hr moving averages. Meanwhile, distillate stockpiles dropped by 2 million barrels.

US West Texas Intermediate (WTI) futures rose 28 cents, or 0.5 per cent to $61.87 a barrel, earlier reaching $61.89, also a new high for 2019.

For the previous week, API reported an increase of 1.93 million barrels of crude oil inventories.

Oil production from Russian Federation fell to 11.3 million bpd last month, but missed the country's target under the supply deal. Brent's prompt spread traded at 44 cents in backwardation, a market structure where prices in the near term are stronger than those further out.

In the March update of its Short-Term Energy Outlook, EIA expected US refinery inputs in 2019 to be relatively flat compared with the record-high 2018 levels, partially as a result of expected high levels of refinery maintenance in 2019.

The Opec+ efforts have allayed concerns over an American Petroleum Institute report that was said to show a three-million-barrel weekly increase in United States crude inventories. USA refineries operated at 86.4 percent of their operable capacity.

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