Crude prices fall as investors re-focus on USA supply glut
Crude prices fall as investors re-focus on USA supply glut
09 June, 2017, 09:00
USA oil fell 5 pct to under $46 a barrel after the nation's stocks unexpectedly increased.
"EIA also stated that United States production can touch a record ten million bpd next year from the current output of 9.3 million". Crude oil prices have risen 1% in the last four weeks. Brent crude futures were trading at $49.61 per barrel at 0027 GMT, up 14 cents from their last close but still nearly 8 percent below 25 May, when an OPEC-led policy to cut oil output was extended to cover the first quarter of 2018. Prices on Tuesday pared gains to close up 1.7 percent after the American Petroleum Institute was said to report stockpiles of the motor fuel increased by 4.08 million barrels last week.
Global consumption of petroleum and other liquids will increase to 98.46 million barrels per day in 2017 and to 100.08 million barrels per day in 2018, said the US Energy Information Administration's (EIA) June 2017 Short-Term Energy Outlook (STEO).
Brent crude prices LCOc1 were at $49.70 per barrel at 1351 GMT, down 42 cents.
Oil prices edged up on Tuesday, finding technical support after sliding below $47 a barrel on pressure from a diplomatic rift in the Middle East and sustained high crude inventories in the United States.
"It's not clear what impact the spat will have on oil supplies", Citi Futures analyst Tim Evans wrote in a research note Monday.
U.S. shale drillers pose a challenge to the Opec-Russia agreement because they can fill the supply shortfall by the middle of next year, Rosneft Oil Co.
OPEC announced the cut in December 2016. We saw a large drop in Cushing, Okla., stocks which also may raise questions about the EIA data. Some were already concerned about rising production from Libya and Nigeria, which are exempt from the agreement.
While Opec works to bring the market back into balance with its agreement to cut output by 1.8m barrels per day (bpd), production in the U.S. has been rocketing. In addition, OPEC is allowing Iran to continue to increase its production levels up to 3.797 million barrels per day.
Yesterday's EIA report somewhat shocked analysts and traders because they were slowing accepting the possibility that inventories were finally showing steady progress toward drawing down to seasonal averages, which is one of the key goals of the OPEC-led plan to cut inventory, trim the global supply glut and stabilize prices.
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