Moody's raises oil price forecast

Moody's raises oil price forecast

Analysts polled by S&P Global Platts expected a 2.5 million-barrel increase in crude stockpiles.

Brent crude oil futures were last up 2 cents at $64.66 a barrel by 2:10pm GMT, while US West Texas Intermediate futures were up 11 cents at $60.82 a barrel.

Moody's Investors Service has raised its medium-term price band for crude oil to US$45-US$65 per barrel from US$40-US$60 per bbl, as continued Opec-led production restraint and strong global demand growth contribute to declining global inventories, offsetting rapid increases in USA shale production. The API data also showed gasoline stocks fell by 1.3 million barrels, while distillates fell by 4.3 million barrels.

Oil edged up on Wednesday as strong Chinese factory activity encouraged investor inflows into industrial commodities such as copper, although fast-growing USA crude output tempered price gains.

Despite these various factors helping to boost commodity prices, Moody's believes prices will remain range-bound, and possibly volatile, amid increases in U.S. shale production; reduced, but still significant, global supplies; and potential noncompliance with agreed production cuts - especially if growth in demand is more tepid.

According to the Weekly Petroleum Status Report by the EIA, U.S. commercial crude oil inventories of the week ending March 9 increased by five million barrels from the previous week.

On Nymex, oil product prices bucked the downtrend among most of energy peers, with April gasoline up 1.1% to $1.906 a gallon and April heating oil adding 0.1% to $1.875 a gallon.

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The seen to potentially overtake Russian Federation as the No. 1 oil producer, with output topping 11 million barrels a day as soon as this year.

Restraint shown by U.S. producers supports Goldman Sachs Group's bullish oil view, the bank said in a report.

"With the tug of war between the US and OPEC the soap opera continues", said Scott Gecas, senior strategic account executive at Long Leaf Trading Group.

Oil prices were little changed from before the data, after some volatility in the minutes after the release.

OPEC's having achieved excellent compliance with its production restraint, with total cuts aided by Saudi Arabia exceeding its targets and Venezuela exceeding its targets because of domestic issues.

Weekly U.S. crude production figures will be published by the Energy Information Administration (EIA) later on Wednesday.

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