Oil stable on falling Libyan output, but bloated United States market still weighs

Oil analysts have grown more unsure that OPEC's supply cut will be enough to offset the increase in US production and do not believe prices will reach $60 a barrel until early next year, according to a Reuters poll on Friday.

USA gasoline stocks USOILG=ECI fell 3.7 million barrels in the week ending March 24, compared with expectations for a 1.9-million barrel drop, the Energy Information Administration (EIA) said on Wednesday. Total inventories were at a record of almost 534 million barrels, the Energy Information Administration (EIA) said on Wednesday.Gasoline stocks USOILG=ECI fell 3.7 million barrels, compared with expectations for a 1.9-million barrel drop.

OPEC agreed to reduce oil production by 1.2 million barrels per day during the first six months.

Oil prices had gained momentum this week on a growing sense that OPEC and nonmember Russian Federation would extend their production cut, seeking to drive the market higher.

This story has not been edited by Firstpost staff and is generated by auto-feed.

Brent oil for June delivery on the ICE Futures Exchange in London rose 23 cents, or around 0.5%, to $52.78 a barrel by 9:00AM ET (13:00GMT), after hitting a high of $52.95 earlier, the most since March 10.

The 300,000-bpd reduction that Russian Federation agreed to represents 2.7 percent of its October output, which exceeded 11 million bpd.

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.

On Tuesday, Iranian Oil Minister Bijan Zanganeh said OPEC and other producing countries were likely to extend their agreement to cut output.

Bigger-than-expected drawdowns in USA petroleum-product stockpiles and gains in refinery activity raised expectations of higher demand for crude.

The IEA does not expect a major increase in global oil prices despite efforts by OPEC and non-OPEC members to reduce output, its executive director Fatih Birol tells Reuters.

The global Brent price of oil for May deliver is hovering near $52.27 per barrel.

While the bulk of early crude shipments from the USA went to Europe, demand has shifted and many recent cargoes have been sent to Asia, Trafigura's Luckock said. On the concerns about supplies, the steady gains in US crude oil inventories prompted Wittner to make note of "slightly bearish" conditions.

A Reuters survey showed Opec oil output has fallen for a third straight month in March and members have now complied with 95 per cent of their commitments under the deal.

The main reason for the extension is rising US shale production, which last week hit 9.13 million barrels daily. "Yet, it is becoming more clear that the events of recent weeks will make it much harder for Libya to be a reliable supplier and get production back to levels they had" before the fall of dictator Moammar Gadhafi, said Flynn.

Elsewhere in the energy market, prices for natural gas held onto earlier losses after the EIA Thursday reported that US natural-gas supplies fell by 43 billion cubic feet for the week ended March 24. But that doesn't mean less production because new rigs are much-more efficient as they can drill more oil in less time.

Related:

Comments


Other news