Benchmark Brent crude is now trading 0.49 per cent down at $54.78 per barrel while West Texas Intermediate (WTI) is down 0.81 per cent at $51.75.
In its report Tuesday, the EIA said it expects "the oil market to be relatively balanced in 2017 and 2018, with inventory draws averaging 0.1 million barrels a day in 2017 and builds averaging 0.2 million barrels a day in 2018".
After surging more than 30% from mid-November to early January, the crude price has wavered in recently as traders weigh up issues ranging from production cuts from OPEC and non-OPEC nations announced in late November, to stronger global economic conditions against renewed U.S. dollar strength, a pickup in USA shale oil production and a strong lift in United States crude inventories. That was in line with the industry-funded American Petroleum Institute, which reported yesterday a 14.2 million-barrel increase.
It is of course possible that the price will continue to rise, following earlier improvements resulting from the decision of Opec, the producers' cartel, to cut production.
The past fortnight saw oil prices consolidate again in a very tight range as traders' dilemma with regard to actual oil output cut and its impact on prices remained uncertain. "The breakdown below $52 on WTI could spark a further selloff lower towards $51".
Benchmark Brent crude was up US51cents, or 1.3 per cent, a barrel at $US55.63 per barrel by 3.25pm Thursday (0735 Friday AEDT).
"Over the last four weeks, crude oil imports averaged about 8.5 million barrels per day, or 10 percent above the same four-week period a year ago", said the report.
Oil prices declined on Wednesday, extending Tuesday's more than 1 percent drop after data showed a build-up in USA crude inventory. Despite the OPEC cuts, USA crude inventories increased more than expected last week. So, what was it that caused oil to move up?
Oil has fluctuated above $50 a barrel since a deal to trim output between the Organization of Petroleum Exporting Countries and 11 other nations took effect on January 1.
"We were probably seeing the last surge of OPEC output and now inventories will start decline, at least they better for the bulls' sake", Kyle Cooper, director of research with IAF Advisors in Houston, said by telephone.
The analysts explained that the average crude transit time from the Arabian Gulf to the U.S. Gulf Coast is 47 days. Domestic production rose to 8.98 million barrels a day, the highest since April. This view is reinforced by data showing that the US oil rig count is rising, said Platts RigData.
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