No let-up in crude prices before March

Oil Surplus Returns       Both OPEC and IEA forecasts suggest stockpiles will grow again in 1H                          

EIA's latest Short-Term Energy Outlook (STEO) from earlier this week estimated that US crude oil production averaged 9.3 million bpd in the whole of 2017, and 9.9 million bpd in December alone. Average WTI crude oil prices are forecast to stay between $4/b and $5/b lower than Brent prices in both 2018 and 2019, falling from the $6/b average price difference seen in the fourth quarter of 2017.

Crude oil production from the Organization of the Petroleum Exporting Countries (OPEC) averaged 32.5 million b/d in 2017, a decrease of 0.2 million b/d from 2016. United States distillate stocks jumped 8.899 million barrels the week ending December 29 to 138.8 million barrels. While this spike in demand is an opportunity for USA producers, it comes at a cost to consumers in the region.

In late December, the NYMEX ultra-low sulfur diesel (ULSD) crack spread against West Texas Intermediate (WTI) climbed north of the $22-$25/b range in place since October, and kept rising until it topped $27/b for the first time since March 2015.

Crude oil prices are up almost 4 percent in the span of seven trading days in one of the commodity's sharpest rallies in years.

Analysts surveyed Monday by S&P Global Platts expect crude stocks fell 3.5 million barrels last week. Accordingly crude import bill will rise by around USD 1.5 billion for every dollar increase in crude price, the report said.

The need for additional supply has been driven by the extreme cold that gripped much of the country, including the Atlantic Coast, the epicenter of the US heating fuel market. Analysts warned the market is not paying enough attention to US production increases.

Trump cancels London trip for embassy opening
Boris Johnson then skewered the "pompous" Mayor for putting the "crucial relationship" between the United Kingdom and USA "at risk".

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On Friday, Trump denied using the language , about Haiti , and tried to turn the conversation to Democrats . Dick Durbin (D-Ill.), who attended Thursday's meeting, asserted that those quotes were accurate.

ECB Minutes Suggest Policy Communication Script May Be Revised Soon
In the US , the Labor Department reported that weekly jobless claims rose by 11,000 to 261,000 new claims, a three-month high . Talk of an end to QE has raised speculation that the European Central Bank could follow up with a rate hike late in 2018.

It's estimated that USA oil carries a $0.50/b premium over oil from the North Sea, due to the longer and more hard shipping route. The U.S. Energy Information Administration this week said it expects Brent to average $60 per barrel for the year, up from the $54 per barrel average for 2017. That compares with an average build of 6 million barrels for the same period from 2013-17.

This week, the API reported another build in gasoline inventories of 4.338 million barrels for the week ending January 5.

Bearish signals include a rise in fuel inventories as well as a fall in refined products profits in Asia, which are expected to hamper orders for new feedstock crude.

Imports into the U.S. Atlantic Coast (USAC) have also been soft recently.

Traders are watching the surplus on the five-year average in crude oil inventories for signs of balance.

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