Brent Crude Oil Prices Today Rise After EIA Report

Brent crude oil pricesbrent crude oil today (Wednesday) increased for the fourth consecutive session despite the U.S. Energy Information Administration's (EIA) bearish supply report.

At 11:15 a.m., Brent crude oil prices were up 0.53% to $52.73 a barrel. Brent - the benchmark price for oil purchases worldwide - is up 7.5% in October. That's after a 12.1% drop in September.

Meanwhile, WTI crude oil prices inched 0.25% higher to $48.65 a barrel. After cratering 9.7% in September, the U.S. benchmark is up 7.9% so far this month.

Here's why oil prices are moving higher today...

Why Brent Crude Oil Prices Are Up Today

The rise in Brent crude oil prices came as the EIA released its weekly supply report. The agency reported oil supplies increased by 3.1 million barrels last week. That surpasses the 1.75 million barrel increase projected by Platts-polled analysts. Total U.S. production reached 9.2 million barrels a day, up 8% from the previous week.

Despite rising supply data, the EIA reported yesterday daily U.S. crude production in September decreased by 120,000 barrels from August. The report projects monthly output will continue to decline through mid-2016. The report lifted oil prices by 5% to their highest settlement since Aug. 31.

Traders are still concerned refineries won't keep up with the current supply glut as many perform seasonal maintenance. Refineries ran at 87.5% capacity last week, down from 89.8% a week earlier. Lower refining capacity could cause an inventory buildup and send oil prices lower again.

"The crude-oil market has to be concerned as they continue to see these very large week-on-week Gulf Coast crude-oil inventory builds, because it's certainly not sustainable through the end of the year," said Andy Lipow, president of Lipow Oil Associates in Houston, to The Wall Street Journal.

But there are still ways to make money in the energy sector no matter where prices move...

According to Money Morning Global Energy Strategist Dr. Kent Moors, all you need to do is follow these three tips to pick the best oil stocks...

[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

Three Ways to Play Brent Crude Oil Prices Today

There are three methods for finding the best oil stocks to buy in today's low price environment...

  • Use the "Yardstick": The yardstick is a tool that helps examine the relationship between a company's booked oil reserves and its trading price. That's important for investors because there's usually a correlation between a firm's profit potential and the amount of oil it has access to - but has not yet extracted. The yardstick will help you easily identify undervalued stocks with the best near-term appreciation potential based on how much oil a company sits on. Learn more about this easy-to-use tool here...
  • Identify "Traditional" Drillers: The cost of production is the most important financial metric for oil firms during low price periods. Companies pursuing expensive onshore projects involving unconventional, horizontally drilled wells become unprofitable when prices aren't near $100 a barrel. That's because higher production volumes don't offset higher operating costs when prices are near current levels. During lower price periods, you'll want to invest in companies drilling this type of "traditional" well to remain profitable no matter how far prices fall...
  • Look for M&A Targets: The past year's oil price crash has seen many companies go belly up. One such firm is Hercules Offshore Inc. (Nasdaq: HERO), the Houston-based drilling company that went under in August. The low price environment has primed the oil sector for a wave of M&A activity, resulting in a new group of heavyweight companies that will lead the market into a "new energy age." Here's how you can identify those companies likely to benefit from restructuring...

Alex McGuire is an associate editor for Money Morning who writes about energy. Follow him on Twitter for all of the biggest oil and gas updates.

Related Articles: