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Crude oil prices which erased their gains at the beginning of the year on the back of the production cut extension from the Organization of Petroleum Exporting Countries by another nine months until the end of the year are now recovering and trading higher once again after a recent report of a unexpected decline in the production and inventories of crude oil in the United States for the week that ended in February 16.

2018 Oil Price Movement

Oil prices started the year on a positive note on the back of the OPEC cuts near the $70 per barrel level. Crude oil prices have then traded above the $60 to $65 level per barrel. Most crude prices have been pressured during the last couple quarters of 2017 due to the growing U.S. production. However, oil prices rallied and recover at the beginning of the year on the back of the strong OPEC cuts.

While the markets debated the role of the United States in the global oil production last year, the unexpected rise in U.S. crude did not prevent oil prices from recovering fully. Since the start of January when oil prices slid to as much as a one week low during the beginning of February.

The U.S. West Texas Intermediate then was down by to trade at as low as $61 per barrel from previously trading closer to $70 while Brent crude futures were down to trade at $65 per barrel slipping down by more than 2%.

The markets then have raised their concern on the declining crude oil prices as the OPEC outlook failed to withstand worries from the market regarding the growing US crude which is also expected to rise in the coming years. Despite this, most crude prices were able to recover during the beginning of the week in the middle of rising inventories and shale output in the U.S.

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Continuous Recovery

In the middle of rising inventory reports from the U.S. Energy Information Administration and the American Petroleum Institute, the two agencies have reported a draw in the production for the week that ended in February 16.

According to the authorities, there was a decline of 1.6 million barrels during the previous week after the overall U.S. production was up above 10 million barrels during the end of January until the beginning of February. Analysts initially had expectations that there would be an increase of 1.8 million barrels in the U.S. weekly production.

Despite this, the stronger U.S. dollar has pushed most oil prices lower during the past week. This was due to the positive outlook of the Federal Reserve Open Market Committee meeting minutes that revealed the Fed’s plans to announce more rate hikes this year.

Brent crude futures traded up at $65.39 per barrel. The U.S. West Texas Intermediate, on the other hand, was 0.49% higher to $61.98 per barrel.  

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