Oil stable on falling Libyan output, but bloated U.S. market still weighs

Brent crude oil rose 52 cents, or about 1 percent, to US$52.94 a barrel by 11:47 a.m. EDT (1547 GMT), after hitting $53.10, the highest level since March 9. That was the contract's fourth consecutive gain and highest settlement since March 7. Additionally, the WTI-Brent spread, which has widened, is narrowing slightly after exports picked up last week, he said. In three to four years, "you won't be able to satisfy demand with short-cycle barrels". Optimism returned this week after members of OPEC's monitoring committee voiced support for continued production cuts beyond the initial six-month period pledged in November.

The EIA reported that crude inventories rose only 867,000 barrels last week, and it is said the market gains were also triggered by the agency disclosing that US crude exports almost doubled last week to climb over 1 million barrels per day (bpd); crude exports for 2016 climbed 12 percent to 520,000 bpd, with China becoming the third-biggest overseas buyer. Output has fallen for a third straight month and members have complied with 95 per cent of their commitments.

Russia has already cut oil production under a deal with OPEC by 200,000 barrels a day, Russian Energy Minister Alexander Novak told CNBC on Thursday, according to TASS.

"It looks like they will potentially extend the cuts", Mark Watkins, the Park City, Utah-based regional investment manager for the Private Client Group at U.S. Bank, which oversees $136 billion in assets, said by telephone.

Some analysts expect the price rally to wane in the coming days on profit-taking and technical re-positioning.

Oil prices fell after a three-day rally ran out of steam as a higher United States rig count signalled rising production from shale, contributing to the global supply glut. The active rig count increased by ten to a total of 662.

The U.S. Embassy in Caracas issued an advisory to any U.S. citizens in Venezuela warning of the potential for violence given reports of political protests planned for Friday afternoon local time.

Still, prices are down about 6 per cent for the first three months of 2017, the biggest quarterly loss since late 2015. But the higher prices not only made more USA production profitable, it also gave drillers the opportunity to hedge their production. The American Petroleum Institute (API), an industry group, will release its weekly inventory data Tuesday afternoon.

With oil prices hovering around $50 a barrel, current project spending is focused on "short-cycle" projects involving USA shale deposits, Daniel Jaeggi, president of Mercuria Energy Group Ltd., said at the FT Commodities Global Summit in Lausanne, Switzerland, Wednesday. Analysts surveyed by Bloomberg projected 2-million-barrel gain.

Gasoline stocks USOILG=ECI fell 3.7 million barrels, compared with expectations for a 1.9-million barrel drop.

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