Oil prices claw back losses, but oversupply still weighs

Brunilde Fioravanti
Апреля 21, 2017

Earlier on Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude stocks fell 1 million barrels on the week, a bit less than anticipated. USA crude futures were up 6 cents at $50.50 a barrel.

US crude oil production rose to 9.25 million barrels per day, official data showed, up nearly 10 per cent since mid-2016.

The latest US government drilling data showed shale production in May was set to rise to 5.19 million barrels per day (bpd), with output from the Permian play, the largest USA shale region, expected to reach a record 2.36 million bpd.

U.S. gasoline stocks posted a counter-seasonal build of 1.5 million barrels, because of rising refining activity.

The bank expects US West Texas Intermediate oil to average $62 a barrel and global benchmark Brent crude to average $65 a barrel in the fourth quarter.

Oil slumped to a two-week low overnight, after U.S. data showed a smaller-than-expected drop in overall crude stocks and a surprising build in gasoline inventories, which raised worries about excessively high global supply. They settled down 53 cents at $52.65 a barrel.

Oil prices are on pace for their biggest daily percentage decline since early March, and USA crude oil production is expected to rise in both 2017 and 2018.

Citi analysts say the increase in USA shale production should be offset by extending production curbs agreed between the Organization of the Petroleum Exporting Countries (OPEC) and other major exporters led by Russian Federation.

Still, Saudi energy minister Khalid al-Falih on Thursday said a preliminary agreement to continue cuts for another three or six months is within reach and could be approved at OPEC's next meeting on May 25.

"Crude oil prices were slightly weaker as the focus turned back to US inventories and output", ANZ bank said on Wednesday.

But U.S. stockpiles-and shale production-have cast doubt on whether the production cuts were enough. Russian Federation and 10 other non-OPEC producers agreed to cut half as much.The accord has lifted oil prices, which are near $55 a barrel.

In Libya, fighting between rival factions has cut oil output, but state oil company NOC was able to reopen at least one field and was pushing to reopen another.

In politics, U.S. President Donald Trump ordered a review of whether the lifting of sanctions against Iran was in the United (Shenzhen: 000925.SZ - news) States' national security interests.

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