The WTI crude spot price closed practically unchanged for the week, at $53.86 per barrel on Friday, while the Brent crude spot price lost 0.16% for the week to close at $56.65 per barrel, despite bearish EIA weekly reports on Wednesday. Crude oil bulls weighed in with arguments about EIA bearish data, as they were trying to defend crude prices. The bulls got huge support from the Paris-based International Energy Agency, or IEA, on Thursday, after reporting that it had estimated OPEC’s crude oil output at 32.1 million barrels per day, or bpd, in January with record compliance, and some producers, especially Saudi Arabia, cut more than pledged.
Short positions in WTI crude oil futures contracts held by producers or merchants totaled more than 657,566 contracts as of February 7, 2017, a record high, according to CFTC data. The open interest also stands at a record high of 2,191,158 contracts, equivalent to about 2.19 billion barrels of WTI crude oil. Crude oil producers could take short hedge positions to lock in a future selling price to protect against a falling crude oil price. Some banks also require producers to hedge against future price risks as a condition for lending.
The EIA weekly U.S. oil inventory report on Wednesday showed that domestic crude supplies increased by another 13.8 million barrels to 508.6 million barrels, excluding the Strategic Petroleum Reserve, in the week ending February 3, compared to the S&P Global Platts forecast for a stockpile increase of 2.5 million barrels. The American Petroleum Institute, or API, inventory data on Tuesday showed a U.S. crude inventory build of 14.2 million barrels.
Separately, the EIA said the weekly U.S. crude oil production increased 63,000 bpd, for the week ending February 3, to 8.978 million bpd. U.S. crude oil output increased 8,000 bpd to an average 8.95 million bpd in February, compared to a January average of 8.942 million bpd. Output has fallen about 6.77% from the peak level of 9.60 million bpd in June 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count jumped another 8 to 591, compared to 316, when the rig count hit the low on June 6, 2016.
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