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Why Did Crude Oil Continue to Trade Higher This Morning?

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Crude oil trades higher

Crude oil continued to trade higher on Thursday morning due to support from the EIA’s (U.S. Energy Information Administration) inventory report released on Wednesday. In addition, the positive outlook on the crude oil market in 2016 by the IEA (International Energy Agency) also supported prices this morning. At 7:37 AM EST, the West Texas Intermediate crude oil futures contract for June delivery was trading at $46.73 per barrel—a gain of 1.1%. The Brent crude futures contract is trading at $47.99 per barrel—a rise of 0.82%.

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IEA’s outlook on the crude oil market

According to the IEA’s monthly oil report, it expects the crude oil production outside OPEC (Organization of the Petroleum Exporting Countries) to fall by 800,000 bpd (barrels per day) in 2016. This is a faster decline in production by non-OPEC members than it forecast in the previous outlook report. The previous report expected a production decline of 700,000 bpd. Read What Does the IEA Expect from the Oil Market? to learn more about the IEA’s previous oil market output report. The oil report supported oil prices this morning. It forecast increased demand and ongoing supply disruptions.

IEA on demand

Commenting on the demand outlook, the IEA said that the global demand for crude oil will grow by 1.2 MMbpd (million barrels per day) in 2016. This is almost unchanged from the previously reported global demand forecast of 1.16 MMbpd. It also added that the global demand outlook will likely increase given the growing demand for gasoline, especially in China and India. The sentiment is also supported by the sharp drop in crude oil inventories reported by the EIA yesterday. To know more about this, read Crude Oil Surged as Crude Oil Inventories Decline.

On Wednesday, oil producers Carrizo Oil & Gas (CRZO) and Canadian Natural Resources (CNQ) gained 3.8% and 0.38%. British Petroleum (BP) and Total S.A. (TOT) fell 0.03% and 0.45%. The SPDR S&P Oil & Gas Exploration and Production ETF (XOP) gained 1.0%.

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