FBN's Connell McShane talks to Fasken Oil and Ranch's Rich Culbertson about the drilling process in the Permian Basin.
Oil prices strengthened Thursday, with USA crude gaining almost 2 percent after traders saw an industry report suggesting domestic crude stockpiles would soon decline again after a surprise rise in the latest week.
Brent crude futures LCOc1 were up 32 cents at $72.71 a barrel by 10:37 a.m. EDT (1437 GMT), while USA crude CLc1 futures rose 60 cents to $68.26 a barrel.
For oil prices, EIA expects Brent Crude spot prices to average $73 a barrel in the second half of 2018 and $69 per barrel in 2019, with WTI Crude averaging $6 a barrel lower than Brent prices in the second half of 2018 and $7 per barrel lower in 2019.
The U.S. Energy Information Administration (EIA) on Wednesday reported a large build in crude oil inventories and a production decline in the week ending July 27. Analysts polled by Reuters had expected a decline of 2.8 million barrels.
USA crude oil refinery inputs averaged 17.48 million barrels per day during last week, which was 195,000 barrels per day higher than the previous week's average.
Futures reversed course after trading lower on concerns about oversupply early in the session.
Crude prices remained supported by the prospect of an Iranian supply squeeze following the imposition of USA oil sanctions, with yesterday's rally stymied by short-term bearish supply factors that continue to weigh on prices.More news: Kerala: After Nipah, Outbreak of West Nile Viral Infection Suspected in Kozhikode
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However, low stocks were still providing a floor as even with last week's rise, overall USA crude inventories are below the 5-year average of around 420 million barrels.
WTI is heading for a roughly flat week after four weekly falls, while Brent is on track to post a fourth week of declines in five, set for a drop of 1.4 percent.
"Bulls are fighting a losing battle ..."
Opec and partners including Russian Federation had agreed in late 2016 to cut output by 1.8 million barrels per day to rebalance supply and demand.
According to a Reuters poll earlier this week, 44 economists and analysts expect the US sanctions to take between 500,000 bpd and 1 million bpd of Iranian crude oil off the market.
The Organisation of Petroleum Exporting Countries has said that crude oil production has gone up in July as Saudi Arabia pumped more volumes into the global market.
But a complete halt to Iranian supplies looks unlikely with Bloomberg reporting on Friday that China, Iran's biggest customer, has rejected a US request to cut imports from the OPEC member.
Meanwhile, a US decision to scale back fuel standards would lead to higher demand, though that could be balanced by trade tensions between the United States and China. Phil Flynn, a market analyst at the PRICE Futures Group in Chicago, said in a daily emailed market report that was supporting the spike in prices on Thursday.