Benchmark Brent crude rose further above $68 a barrel on Tuesday, supported by oil output cuts led by the Organization of the Petroleum Exporting Countries and allies including Russian Federation that are due to run until the end of 2018.
The American Petroleum Institute reports its weekly inventories numbers this afternoon, followed by the government's official report tomorrow morning.
The API releases its data at 4:30 p.m. EST (2130 GMT) on Tuesday and the government report is due at 10:30 a.m. on Wednesday. "We expect to see growth near 2 million barrels per day in 2018 and 1.3 million barrels per day in 2019". "In our view, the back of the Brent and WTI curves are both still under priced".
"The fact that the crude benchmarks are establishing highest levels since spring of 2015 on very little fresh fundamental input continues to suggest a strong market underpinning", said Jim Ritterbusch, president of Ritterbusch & Associates, in a Tuesday note.
Crude oil prices fell Friday, dropping from highs last seen in 2015, as soaring US production undermined a 10% rally from December lows that were driven by tightening supply and political tensions in OPEC member Iran, Reuters reported.
Crude oil futures continued to surge Tuesday on expectations the global oil market will soon re-balance.
Despite this, USA production is expected to break through 10-million barrels a day very soon, largely thanks to soaring output from shale drillers.
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There is no sign yet that OPEC is prepared to relax its supply restraint.
Rising U.S. production and weaker refined products demand weighed on the market, traders said.
Pump jacks bring oil up from wells in North Dakota.
Nationwide output will average 10.85 million barrels a day next year and 10.27 million this year, both surpassing the prior record of 9.6 million pumped in 1970, the Energy Information Administration said in its monthly Short-Term Energy Outlook, which included the first estimates for 2019. Only Russia and Saudi Arabia produce more.
However, Innes added that Middle East turmoil would remain a key focus for oil markets and had the potential to "send oil prices rocketing higher".
Some analysts have said a rise in USA shale oil production could discourage OPEC and Russian Federation to maintain their deal to curb supply until the end of the year for fears of losing market share.