World oil prices edge down over expected climb in United States output

Ausiliatrice Cristiano
Aprile 21, 2017

Crude futures were trading more than 30 cents higher in Asia early Thursday, but the recovery, against a rout of almost $2/barrel at the previous day's close, was more likely bargain-hunting than the start of a full correction, as the weekly counter-seasonal build in United States gasoline inventories continued to weigh on market sentiment.

Oil prices dipped on Wednesday as bloated US supplies weighed on markets while a fall in Saudi crude exports was offset by rising production in the country.

USA crude oil production reached 9.24 million barrels per day (bpd), according to the latest Energy Information Administration data, making it the world's third-largest producer after Russian Federation and Saudi Arabia.

Gasoline stocks also posted a counter-seasonal build of 1.4 MMbbl.

Brent crude has gained about 19 percent since OPEC made a decision to pare output, and the benchmark grade was 24 cents higher at $55.13 a barrel at 11:59 a.m.in London.

James Williams, president of energy consultant WTRG Economics in London, Arkansas, said the minister's bullish statement did not lift prices much because of rising USA shale production.

This means that the Saudi oil may still make its way into a glutted global market as significant proportions of its refined fuel products are exported.

According to data the single countries report to the Joint Organizations Data Initiative (JODI), Saudi Arabia's crude oil exports in February stood at 6.957 million barrels per day, the lowest volumes shipped in a month since May 2015 when exports were 6.935 million bpd.

It would be premature to talk about the participation of OPEC members Iran, Nigeria and Libya in any extension of output limits, Barkindo and United Arab Emirates Energy Minister Suhail Al Mazrouei said at the conference.

There was also some vague optimism that OPEC would extend production cuts following rhetoric by Kuwait and Saudi Arabian officials, although sentiment remained cautious.

WTI was trading lower on Tuesday at $52.21 a barrel, while Brent slipped to $54.83, as of 10:40 am GMT.

Geopolitical concerns have helped underpin oil.

The compliance rate with the agreement among OPEC members and some non-members, including Russian Federation, "has been impressive", the International Energy Agency (IEA) said in its monthly oil market report, giving a lift to oil prices.

Data from the American Petroleum Institute (API) on Tuesday showed that US markets remained bloated.

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