April crude oil futures are poised to close higher for the week. It wasn’t an agreement to freeze production at January levels that drove the market higher. It wasn’t a drop in supply either. The market found support after weekly data from the U.S. government revealed a decline in weekly domestic crude output.
The week began with OPEC and Non-OPEC members still discussing a potential production freeze. Saudi Arabia and Russia are still behind the proposal, but Iran is not, calling it “a joke”. The Saudis are pretty firm about freezing production, but totally against cutting production, saying recently “it won’t happen”.
U.S. crude oil supply continued to rise. The American Petroleum Institute reported a 9.9 million barrel increase for the week-ended February 26. The U.S. Energy Information Administration reported that inventories rose 10.4 million barrels during the same time period. Both reports exceeded the 2.5 million barrel estimate. Once again I have to ask myself, “How can they both be so far off from the actual?”
The jump in supply didn’t matter this week, however, because the professionals appear to have shifted their focus from the past to the future. Oil supply is being perceived as old news while oil production is being looked at as the future.
This week, the EIA reported that total crude production fell by 25,000 barrels to stand at 9.077 million barrels a day. This is a positive…