The U.S. Energy Information Administration on Wednesday reported crude-oil inventories climbed by 13.8 million for the week ended Feb. 3. Oil prices rose on the day, a move confounding many who thought the increase would send prices lower.
No need to be confused.
"The market as a whole is focused on the OPEC deal," says Hedgeye Senior Energy Policy analyst Joe McMonigle. Secondary OPEC sources say the deal to cut the 14-member country's oil production, from 33.8 million barrels a day to 32.5 million barrels a day, has been 90% compliant.
"I'm still a skeptic on that point," McMonigle says.
The more important thing to watch, he says, is how higher oil prices (up 11% in the past three months) are affecting U.S. shale production, McMonigle says.
Active U.S. rig counts rose from 729 versus 571 a year ago. "The U.S. shale producers are really responding to the higher oil prices as a result of the OPEC deal," McMonigle says.
Click here to watch McMonigle's entire interview on BNN.