Oil slips as USA crude inventories show signs of increasing

No Worries

No Worries

It's tough to stay positive on crude when the world's three oil superpowers are likely to increase production.

West Texas Intermediate for July delivery traded at $66.99 a barrel on the New York Mercantile Exchange, down $1.58, at 9:16 a.m.in New York. Traders are trying to understand the divergence between two benchmarks, WTI and Brent, as the U.S. oil ended day in red after post-data fall while Brent recovered most of losses and closed positively on Thursday.

"Crude oil remained under pressure as the market remained focused on the discussion between OPEC members about whether they should increase production later this year", ANZ said in a note.

Oil prices decline for third consecutive on the background of statements by Saudi Arabia and Russia's readiness to increase production, a new jump in drilling activity in the US and a record year of sales of hedge funds in the futures market.

The United States accounted for more than half of that decline, as USA crude oil and other liquids inventories decreased by 162 million barrels over that period.

"It's hard to get really excited in the short-term on the oil price, given that USA production is surging, hitting record-highs every week", said Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC in Boston.

About 883,000 barrels per day (bpd) of USA crude is expected to land at Asian ports in June, up from 769,000 bpd in May, which was the previous high for US crude exports to Asia.

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Demand for the motor fuel over the past four weeks rose 0.8 percent year-on-year ahead of the Memorial day weekend which marks the official start to the summer driving season in the United States.

"The big thing is the increasing spread between Brent and WTI".

In Europe, August Brent crude fell 77 cents, or 1%, to $US76.79 a barrel.

The largest fall in production was registered in Nigeria, according to the survey based on shipping data from external sources, Thomson Reuters flows data, and information provided by sources at OPEC and oil and consulting firms. Between January 2017 and April 2018, USA and OECD crude oil days of supply fell by 11.5 and 4.5 days, respectively, to 59.2 and 60.6 days.

According to General Electric's Baker Hughes energy services firm, USA drillers added two oil rigs in the week to June 1, bringing the total to 861, the most since March 2015.

In May, Russia reached the 95% compliance with the deal led by the OPEC+ countries, which curbs oil production, Russian Energy Minister Alexander Novak told reporters on Saturday.

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